A Friend of Yours Owes You $10,and He Wants to Flip

question 88

Multiple Choice

A friend of yours owes you $10,and he wants to flip a coin for double or nothing.If the coin lands heads,he will pay you $20.If the coin lands tails up,he will pay you nothing.As the coin is in midair,what is your expected value of this wager?

• A)$0
• B)$10
• C)$20
• D)$30

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Definitions:

Equity Method

An accounting technique used by companies to assess their investments in other companies, recognizing income and changes in investment value proportionate to ownership level.

Consolidated Balance Sheet

A financial statement that aggregates the financial position of a parent company and its subsidiaries, presenting it as one single entity.

Consolidation Elimination

The process of removing internal transactions and balances between entities within a single group to prepare consolidated financial statements.

Equity Method

An accounting technique used to record investments in affiliate companies where the investor has significant influence but not full control, typically between 20% and 50% ownership.