In a Carnival Game, a Person Wagers $2 on the Roll

question 60

Multiple Choice

In a carnival game, a person wagers $2 on the roll of two dice. If the total of the two dice is 2, 3, 4, 5, or 6 thenthe person gets $4 (the $2 wager and $2 winnings) . If the total of the two dice is 8, 9, 10, 11, or 12 then theperson gets nothing (loses $2) . If the total of the two dice is 7, the person gets $0.75 back (loses $0.25) . What isthe expected value of playing the game once?

• A) -$0.04
• B) -$0.42
• C) $2.00
• D) $0.00

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Definitions:

Partially Amortized

A loan repayment plan where the total sum borrowed is not fully paid off by the end of the loan term, leaving a lump sum due as a "balloon payment."

Net Advantage

The quantitative benefit or gain derived from a particular decision or action, after considering all related costs and disadvantages.

Leasing

A financial arrangement where one party allows another to use an asset for a period of time in exchange for payment.

NPV

Net Present Value, a calculation used to determine the present value of an investment by the sum of its future cash flows minus the initial investment.