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Math Help - Probability question

  1. #1
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    Smile Probability question

    Dear Forum , I having issues with the following any feedback would be appreciated..

    Two coins are flipped. You win $2 if either 2 heads or 2 tails turn up; you lose $3 if a head and a tail turn up? What is the expected value of the game?

    thanks -AC 360-
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  2. #2
    Banned
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    Quote Originally Posted by AlgebraicallyChallenged View Post
    Dear Forum , I having issues with the following any feedback would be appreciated..

    Two coins are flipped. You win $2 if either 2 heads or 2 tails turn up; you lose $3 if a head and a tail turn up? What is the expected value of the game?

    thanks -AC 360-
    HH win $2
    TT win $2
    HT lose $3
    TH lose $3

    Each outcome has probability of .25

    Expected value =.25*2+.25*2+.25*-3+.25*-3=-.5
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  3. #3
    Senior Member I-Think's Avatar
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    Expected Value

    The formula for this type of questions is

    E(X)=\Sigma{xP(X)}

    You need to conduct 3 steps
    1) List each possible event
    2) State the probability of each event occurring
    3) State the outcome associated with each event

    Event:2H 1H1T 1T1H 2T
    Prob.: 0.25 0.25 0.25 0.25
    Outcome: +2 -3 -3 +2

    Use the formula: E(X)=\Sigma{xP(X)}= 0.5-0.75-0.75+0.5
    E(X)=-0.5 dollars
    Last edited by I-Think; June 8th 2009 at 08:00 PM.
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