It will rain with probability 0.8. if it does, you earn $200 and if not, you earn $400. the expected value is:

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Leonel Salas

Business

20 August, 22:19

It will rain with probability 0.8. if it does, you earn $200 and if not, you earn $400. the expected value is:

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Natalya Farley · Answer 1

It will rain with probability 0.8. if it does, you earn $200 and if not, you earn $400. the expected value is: $200.

This is true because the probability of raining is 0.8%, which is 0.2% away from becoming 1.0%, which is 100%. Since you earn $200 if it rains and the probability of rain is the majority, the expected value is $200.