Homework 7a. Lotteries. Expected Value. Standard deviation Solve the following problem. Show all your work for...
Homework 7a. Lotteries. Expected Value. Standard deviation
Solve the following problem. Show all your work for the analytical part. Save the file and upload it through the link provided.
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(SOLVED EXAMPLE) For the following lottery, (16, 4; 0.5, 0.5), calculate the expected value and the standard deviation of the lottery.
EX= i=1nXi*pi=16*0.5+4*0.5=8+2=10
VarX= i=1nXi-EX2*pi=16-102*0.5+4-102*0.5=
62*0.5+-62*0.5=36*0.5+36*0.5=18+18=36
Std.Dev.X= Var(X)=36=6
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For the following lottery, (13, 7; 0.5, 0.5), calculate the expected value and the standard deviation of the lottery.
3. Compare the two lotteries and explain which lottery would you choose and why.
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Homework 7a. Lotteries. Expected Value. Standard
deviation
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