Ask Question
6 February, 00:54

If an unfair coin is tossed into the air and drops without interruption, its probability of landing on heads is 0.51 whereas the probability of landing on tails is 0.49. If the payoff for landing on heads is $0.99 and the payoff for landing on tails is $1.01 and it costs $1 to play each game, should you play?

1) Yes, because over the long run your expected value is greater than the lowest payoff

2) No, because over the long run your expected value is lower than the lowest payoff

3) Yes, because over the long run your expected value is greater than the cost to play

4) No, because over the long run your expected value is less than the cost to play

+2
Answers (1)
  1. 6 February, 02:18
    0
    4) No, because over the long run your expected value is less than the cost to play

    Step-by-step explanation:

    The expected value is ...

    0.51*0.99 + 0.49*1.01 = 0.5049 + 0.4949 = 0.9998

    This expected value is less than the cost to play, so you will lose money in the long run. You should not play.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “If an unfair coin is tossed into the air and drops without interruption, its probability of landing on heads is 0.51 whereas the ...” in 📘 Mathematics if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers