A game of chance offers the following odds and payoffs. Each play of the game costs $100, so the net profit per play is the payoff less $100.
Probability | Payoff | Net Profit |
.10 | $500 | $400 |
.50 | 100 | 0 |
.40 | 0 | −100 |
What are the expected cash payoff and expected rate of return? Calculate the variance and standard deviation of this rate of return.
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