Check math and help w/ Expected Value
Assume we know that 2 horses in two different races each have exactly a 3.30/1 and 2.8/1 chance of winning their respective races. We are offered a bet that pays 25/1 if both horse win their respective races. How do we calculate the expected value of this bet.
I avoided every math class I ever got close to, so please excuse my ignorance.
This is the track I'm on, please confirm I am doing it correctly, and help me get to the final answer that eludes me.
Calculate the probability for each horse:
Horse #1 3.30/1 = 1/(1+3.30) = .2325581
Horse #2 2.80/1 = 1/(1+2.80) = .2597402
Probability of both events happening is .2325581 * .2597402 = .0604046
Please confirm I have that part correct.
If that is correct, how do I use it to calculate the EV of the offered bet?
In my head I would look at that and ball park estimate its roughly 1/4 * 1/4 = 1/16
which means in the context of the offered bet I would loose $1 15 times and gain $25 1 time. So I would take the bet.
Is it 25/15 = 1.66? which would mean I have a 66% advantage, or gain 66 cents every time I bet a dollar given the circumstances I described?
How can I use the .0604046 figure to calculate exactly what the EV is rather than just that quick ...in the head math estimation with the fractions above.