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17 June, 15:10

A game involves tossing a biased coin that has a 60% probability of landing on heads. If a player wins $50 when heads appears, what is the expected value of a player's winnings?

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  1. 17 June, 15:23
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    Probability of winning = 0.6, Probability losing = 1-0.6 = 0.4

    Expected value = 50 (0.6) - 1 (0.4) = $29.6

    The interpreation of this is that if you play many times you would expect a profit of $29.6.
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