Question

Help Save & Exit Submit Check my work Problem 7-7 Expected return and standard deviation A game of chance offers the following odds and payoffs. Each play of the game costs $200, so the net profit per play is the payoff less $200. Probability 0.20 0.40 0.40 Payoff $600 400 Net Profit $400 200 -200 a-1. What is the expected cash payoff? (Round your answer to the nearest whole dollar amount.) a-2. What is the expected rate of return? (Enter your answer as a percent rounded to the nearest whole number.) b-1. What is the variance of the expected returns? (In the calculation, use the percentage values, not the decimal values for the rates of return. Do not round Intermediate calculations. Round your answer to the nearest whole number.) b-2. What is the standard deviation of the expected returns? (Enter your answer as a percent rounded to 2 decimal places.) 280 a-1. a-2. b-1. b-2 Expected cash payoff Expected rate of return Variance Standard deviation Prex 4 of 10 !!! Next >

Answer 1

Answer:

Probability Pi	Payoff R	Net Payoff N	Pi*R	Pi*N	Pi*(N/200-Nm)^2
0.2	600	400	120	80	0.512
0.4	400	200	160	80	0.144
0.4	0	-200	0	-80	0.784
Expected Payoff =∑Pi*R	280
Expected rate of return Nm=∑Pi*N/200	40%
Varince V=∑Pi*(N/200-Nm)^2	1.44
Standard devition =√V	120.00%