If you are playing a coin toss game and following is the payoff table Result Payoff...

Question

Question

If you are playing a coin toss game and following is the payoff table Result Payoff

Heads Get $25

Tails Lose $25

Assume that you have $100, after you play the game once, how much money will you have?

A.$100 since the expected payoff of this game is 0.

B. $125 OR $75

C. $625 since the variance of the payoff is 625

D. not enough information

Answer 1

Answer #1

expected payoff= probability of win*gain+probability of loss*loss=50%*25+50%*(-25)=0

Assume that you have $100, after you play the game once, how much money will you have

=current value of investment+expected payoff

=100+0

=100

so answer will be=A.$100 since the expected payoff of this game is 0.

the above is answer..

Answer 2

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