Mean and variance of a continuous random variable example
Answers
Answered by
1
hey mate !
Here is your answer.
Suppose an individual plays a gambling game where it is possible to lose $1.00, break even, win $3.00, or win $10.00 each time she plays. The probability distribution for each outcome is provided by the following table:
Outcome -$1.00 $0.00 $3.00 $5.00
Probability 0.30 0.40 0.20 0.10
The mean outcome for this game is calculated as follows:
= (-1*.3) + (0*.4) + (3*.2) + (10*0.1) = -0.3 + 0.6 + 0.5 = 0.8.
In the long run, then, the player can expect to win about 80 cents playing this game -- the odds are in her favor.
Similar questions