The Variance of a Lottery Is

question 36

Multiple Choice

The variance of a lottery is:

• A)the average payoff you would get from the lottery if the lottery were repeated many times.
• B)the sum of the probability-weighted squared deviations of the possible outcomes of the lottery.
• C)a measure of risk preference.
• D)the amount an agent would be willing to pay to enter a lottery.

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Definitions:

Acadians

A group of French-speaking people from the Maritime provinces of Canada, whose ancestors were deported by the British in the 18th century.

Standard Deviation

An approach to assess the magnitude of spread or variation within a group of data points.

Normally Distributed

Refers to a statistical distribution that is symmetrical, with most observations clustering around the central peak and the probabilities for values further away from the mean tapering off equally in both directions.

MBA Degree

Master of Business Administration, a postgraduate degree focusing on business administration and investment management.