HomeworkLib
Question

You have inherited a lottery ticket may be a $10,000 winner. You have a 0.25 chance...

You have inherited a lottery ticket may be a $10,000 winner. You have a 0.25 chance of winning the $10,000 and a 0.75 chance of winning $0. You have an opportunity to sell the lottery ticket for $2,500. What is your expected return and what should you do if you are risk averse?

math   Statistics-And-Probability   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
You have inherited a lottery ticket may be a $10,000 winner. You have a 0.25 chance...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • You own a lottery ticket, which has a 1 percent chance (0.01) of winning $1,000. Someone...

    You own a lottery ticket, which has a 1 percent chance (0.01) of winning $1,000. Someone has offered you 12 dollars to buy this ticket and you refused, what does that indicate in terms of your risk preference (i.e. risk-averse, risk-neutral or risk-loving)? Explain (simple calculations will be needed). Afterward, your friend Jennifer commented: “You should have accepted that offer. I would sell the ticket for 9 dollars!” What does that comment indicate in terms of Jennifer’s risk preference? Explain...

  • For a multistate lottery, the following probability distribution represents the cash prizes of the lottery with...

    For a multistate lottery, the following probability distribution represents the cash prizes of the lottery with their corresponding probabilities. Complete parts (a) through (c) below. X (cash prize, $) Grand prize 200,000 10,000 100 P(x) 0.00000000877 0.00000023 0.000001734 0.000147996 0.004260186 0.008970789 .01261213 0.97400692623 4 3 0 0 (a) If the grand prize is $13,000,000, find and interpret the expected cash prize. If a ticket costs $1, what is your expected profit from one ticket? The expected cash prize is $...

  • If you buy a lottery ticket in 50 lotteries, in each of which your chance of...

    If you buy a lottery ticket in 50 lotteries, in each of which your chance of winning a prize is 1/100, what is the (approximate) probability that you will win a prize? A.) at least once? B.) exactly once? C.) at least twice? D.) How many times do you expect to win?

  • homework help please P(x) For a multistate lottery, the following probability x (cash prize, distribution represents...

    homework help please P(x) For a multistate lottery, the following probability x (cash prize, distribution represents the cash prizes of the lottery Grand prize with their corresponding probabilities. Complete parts 200,000 (a) through (c) below. 10,000 100 0.00000000562|| 0.00000012 0.000001831 10 000156178 0.005556668 0.008631032 0.01493052 0.97072364538 Question Viewer (a) If the grand prize is $13,000,000 find and interpret the expected cash prize. If a ticket costs $1, what is your expected profit from one ticket? The expected cash prize is...

  • 2. Consider two lotteries, A and B. With lottery A, there is a 0.90 chance that...

    2. Consider two lotteries, A and B. With lottery A, there is a 0.90 chance that you receive a payoff of S0 and a 0.10 chance that you receive a payoff of $400. With lottery B, there is a 0.50 chance that you receive a payoff of S30 and a 0.50 chance that you receive a payoff of $50, a) Verify that these two lotteries have the same expected value but that lottery A has a bigger variance than lottery...

  • The chance of winning a lottery game is 1 in approximately 26 million. Suppose you buy...

    The chance of winning a lottery game is 1 in approximately 26 million. Suppose you buy a​ $1 lottery ticket in anticipation of winning the ​$4 million grand prize. Calculate your expected net winnings for this single ticket. Interpret the result. Find μ=E(x). μ=____________________​(Round to the nearest hundredth as needed. Do not include the​ $ symbol in your​answer.)

  • The chance of winning a lottery game is 1 in approximately 23 million. Suppose you buy...

    The chance of winning a lottery game is 1 in approximately 23 million. Suppose you buy a​ $1 lottery ticket in anticipation of winning the $6 million grand prize. Calculate your expected net winnings for this single ticket. Interpret the result. Find μ = E(x) μ=

  • A lottery ticket costs 10 dollars. You have a 2% chance to win 400 dollars, otherwise...

    A lottery ticket costs 10 dollars. You have a 2% chance to win 400 dollars, otherwise you win nothing. Write down a probability distribution table for the random variable X = net gain = (amount won)-(ticket cost), and nd its expected value (hint: answer is an integer). Should you play or not

  • Problem 13-27 (Algorithmic) In a certain state lottery, a lottery ticket costs $3. In terms of...

    Problem 13-27 (Algorithmic) In a certain state lottery, a lottery ticket costs $3. In terms of the decision to purchase or not to purchase a lottery ticket, suppose that the following payoff table applies: State of Nature Win Lose Decision Alternatives s1 s2 Purchase Lottery Ticket, d1 450000 -3 Do Not Purchase Lottery Ticket, d2 0 0 A realistic estimate of the chances of winning is 1 in 200,000. Use the expected value approach to recommend a decision. If required,...

  • (a) If your life plan is to buy one lottery ticket every day for 5 days...

    (a) If your life plan is to buy one lottery ticket every day for 5 days a week, 50 weeks a year for the next 50 years, where on any lottery ticket you have a one in 500,000,000 chance of winning the jackpot, what is the probability you will win the jackpot at least once in your lifetime? Hint: Let Wi be the event you win the jackpot with the ith lottery ticket. Assume these are independent. (b) (continued) Buying...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT