Solve the Problem. -In a Game, You Have a 1/42 Probability of Winning

question 120

Multiple Choice

Solve the problem.
-In a game, you have a 1/42 probability of winning $67 and a 41/42 probability of losing $7. What is your expected value?

• A)$1.60
• B)$8.43
• C)-$5.24
• D)-$6.83

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Definitions:

Gold Futures

Contracts for the future delivery of gold at a specified price, used for hedging and investing purposes.

Arbitrage Profit

The profit made from buying and selling equivalent financial instruments or capitalizing on price differences in different markets to generate a risk-free return.

Risk-free Rate

The theoretical rate of return of an investment with zero risk, typically associated with government bonds.

Swap Market

A marketplace where parties exchange financial instruments, such as interest rates or currencies.