Consider a Lottery with Four Possible Outcomes $\mathrm { A } , \mathrm { B } , \mathrm { C }$

question 12

Multiple Choice

Consider a lottery with four possible outcomes, $\mathrm { A } , \mathrm { B } , \mathrm { C }$ , and $\mathrm { D }$ . The associated payoffs are: $\mathrm { A }$ $\$ 10 , \mathrm {~B} - \$ 30 , \mathrm { C } - \$ 70$ , and D - $\$ 150$ . The probabilities are $P ( A ) = 0.40 , P ( B ) = 0.20 , P ( C ) =$ $0.30$ , and $P ( D ) = 0.10$ . The variance of this lottery is what?

• A) 912
• B) 1,824
• C) 1,618
• D) 3,326

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