The Connotation "Expected Value" or "Expected Gain" from Playing Roulette

question 4

Multiple Choice

The connotation "expected value" or "expected gain" from playing roulette at a casino means

• A)the amount you expect to "gain" on a single play.
• B)the amount you expect to "gain" in the long run over many plays.
• C)the amount you need to "break even" over many plays.
• D)the amount you should expect to gain if you are lucky.

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Definitions:

Time Value

The principle that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Hurdle Rate

The minimum rate of return on an investment required by an investor or manager, used to assess its viability.

Cost Of Capital

The rate of return that a business must achieve to meet the expectations of its investors and creditors, representing the opportunity cost of investing capital in a specific business.

IRR

The Internal Rate of Return; a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.