A Scratch-Off Lottery Ticket Costs $1

question 32

Multiple Choice

A scratch-off lottery ticket costs $1.00 to purchase, and it pays out a prize of $0, $1, $5 and $10 with probabilities of 85%, 12%, 2% and 1%, respectively. What is the expected value of the profit of this Scratch-off lottery ticket?

• A) -$0.88
• B) -$0.73
• C) -$0.68
• D) -$0.56
• E) None of the above.

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