Calculate the Expected Value of the Following Game

question 150

Essay

Calculate the expected value of the following game. If you win the game, your wealth will increase by 36 times your wager. If you lose, you lose your wager amount. The probability of winning is ¹/₃₈ Calculate the variance of the game.

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Definitions:

Industrial Policy

The view that government—using taxes, subsidies, and regulations—should nurture the industries and technologies of the future, thereby giving these domestic industries an advantage over foreign competition.

Corporate Houses

Large companies or business organizations that operate in multiple areas or sectors.

Subsidized Rate

A reduced interest rate on loans provided by the government or other institutions to support specific groups or activities.

Productivity

The measure of how efficiently goods and services are produced, often evaluated as output per unit of input.