The cost of the entry ticket to the Poker tournament is $10,000. When Amy will win the tournament, the amount that she will take away is $490,000. Because
500,000 - 10,000 = $490,000.
The probability of this happening is 0.5% = 0.0005.
On the other hand, if Amy loses she will lose 10,000 dollars for just entering the tournament. The probability of this happening is 1 - 0.0005 = 0.995. The table would look as shown below,
value probability Value * probability
Amy wins 490 0.005 2.45
Amy lose -10 0.995 -9.95
So, the expected value will be
2.45 + (-9.95) = -7.5
2.45+(−9.95)=−7.5 thousand dollars.
What is probability?
The probability is equal to the variety of possible outcomes. the total number of outcomes that could occur. For instance, there is only one way to receive a head and there are a total of two possible outcomes, hence the probability of flipping a coin and getting a head is 1 in 2. (a head or tail). P(heads) = 12 is what one writes.
Therefore, the expected value will be −7.5 thousand dollars.
Learn more about probability from here:
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