Suppose That You Roll Two Dice $10$ If You Roll a Double

question 73

Multiple Choice

Suppose that you roll two dice. You will be paid $ $10$ if you roll a double. You will not receive anything for any other outcome. How much should you be willing to pay for the privilege of rolling the dice, to the nearest cent?

• A) $2.87
• B) $2.47
• C) $3.27
• D) $2.07
• E) $1.67

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Definitions:

Nominal Rate

The interest rate before adjustments for inflation, reflecting the rate of interest that a borrower pays a lender.

Annual Return

The percentage change in investment value from one year to the next, including any dividends or interest, indicating the investment’s gain or loss.

Dividend

A portion of a company's earnings distributed to its shareholders, typically in the form of cash or additional stock.

Dual-Class Shares

A corporate structure with two or more classes of stock, each with differing voting rights, dividends, or other attributes.