On Any Given Day,a Salesman Can Earn $0 with a 20

question 67

Multiple Choice

On any given day,a salesman can earn $0 with a 20% probability,$100 with a 40% probability,or $300 with a 20% probability.His expected earnings equal

• A) $0.
• B) $100 because that is the most likely outcome.
• C) $100 because that is what he will earn on average.
• D) $200 because that is what he will earn on average.

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Definitions:

Repossess

The act of taking back possession of property by a seller or lender from the buyer or borrower, typically due to failure in payment.

Auction

A public sale in which goods or properties are sold to the highest bidder.

Mortgagee

The lender or financial institution that provides a loan secured by real property.

Financial Institution

An organization that provides financial services to its clients or members, including banks, credit unions, insurance companies, and investment firms.