Bob went to the casino and bet $8 on #9 of Game of which P(winning) =1/37 the pa
ID: 3156096 • Letter: B
Question
Bob went to the casino and bet $8 on #9 of Game of which P(winning) =1/37 the pay off -odds is96:3 Find a) prize B) the odd -against that bet C) is he better off with that bet or abet on a small town lotto Which expected -value is 0.85? Bob went to the casino and bet $8 on #9 of Game of which P(winning) =1/37 the pay off -odds is96:3 Find a) prize B) the odd -against that bet C) is he better off with that bet or abet on a small town lotto Which expected -value is 0.85? Find a) prize B) the odd -against that bet C) is he better off with that bet or abet on a small town lotto Which expected -value is 0.85?Explanation / Answer
(a) SInce the pay-off odds is 96 : 3 for every $3 he bets , he will get back $96 back if he wins. Since he bet $8 the prize for him would be, $(96*8/3) = $256
(b) Since his chances of winning are 1/37. This means that he will win in 1 out of 37 chances. This means if there are 37 matches , then ideally he should win in 1 and loose in 36. Thus odd against his bet are 36 : 1
(c) Let's see how much is his expected amount of return.
E = (1/37)*$256 -$8 = -$1.08
Since his expected amount of return is negative , he shouldn't place that bet.