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In a large casino, the house wins on one of its games with a probability of 51%. 1:1, meaning that if you win, you gain the amount you bet; if you lose, you lose What is the expected value to the player of betting $1?

In a large casino, the house wins on one of its games with a probability of 51%. 1:1, meaning that if you win, you gain the amount you bet; if you lose, you lose What is the expected value to the player of betting $1?

College Algebra
College Algebra
10th Edition
ISBN:9781337282291
Author:Ron Larson
Publisher:Ron Larson
Chapter8: Sequences, Series,and Probability
Section: Chapter Questions
Problem 41CT: On a game show, a contestant is given the digits 3, 4, and 5 to arrange in the proper order to form...
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1. In a large casino, the house wins on one of its games with a probability of 51%. All bets in the game are 1:1, meaning that if you win, you gain the amount you bet; if you lose, you lose the amount you bet. What is the expected value to the player of betting $1? 2. Suppose a charitable organization decides to raise money by raffling a trip worth $500. If 3,000 tickets are sold at $1.00 each, find the expected net winnings for a person who buys 1 ticket. 3. An insurance policy sells for $720. Based on past data, an average of 1 in 70 policyholders will file a $10,000 claim, an average of 1 in 100 policyholders will file a $20,000 claim, and an average of 1 in 400 policyholders will file a $50,000 claim. (a) What is the expected value to the company per policy sold? (b) What is the expected profit of selling 100,000 policies?
Transcribed Image Text:1. In a large casino, the house wins on one of its games with a probability of 51%. All bets in the game are 1:1, meaning that if you win, you gain the amount you bet; if you lose, you lose the amount you bet. What is the expected value to the player of betting $1? 2. Suppose a charitable organization decides to raise money by raffling a trip worth $500. If 3,000 tickets are sold at $1.00 each, find the expected net winnings for a person who buys 1 ticket. 3. An insurance policy sells for $720. Based on past data, an average of 1 in 70 policyholders will file a $10,000 claim, an average of 1 in 100 policyholders will file a $20,000 claim, and an average of 1 in 400 policyholders will file a $50,000 claim. (a) What is the expected value to the company per policy sold? (b) What is the expected profit of selling 100,000 policies?
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