By investing a person can make a profit of $3000 with a with a 3 percent probability or take a loss of $1000 with a 7 percent probability, what is the investors expected net gain for the year?
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By investing a person can make a profit of $3000 with a with a 3 percent probability or take a loss of $1000 with a 7 percent probability, what is the investors expected net gain for the year?
Need Help Please
Do you mean .3 and .7?
Or .03 and .07?
In the second case you are implying that there is a .9 probability of making nothing.
In the first case, just multiply .3 with 3000
and add that to the product of .7 and -1000.
Which produces 9000-7000=2000.