Cal Has a Choice Between Two Gambles

question 83

Multiple Choice

Cal has a choice between two gambles. The first gamble offers a 50 percent chance of winning $20 and a 50 percent chance of losing $20. The second gamble offers a 20 percent chance of winning $100 and an 80% chance of losing $20. Which choice has the higher expected value?

• A)The expected value of both gambles is the same, so Cal would be indifferent between the two.
• B)The expected value of the first gamble is higher.
• C)The expected value of both gambles is the same, but Cal would prefer the first gamble since the chances of winning are higher.
• D)The expected value of the second gamble is higher.

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Definitions:

Factor Analysis Validity

Factor Analysis Validity involves using factor analysis, a statistical method, to identify the underlying structure of psychological constructs, thus helping to validate the content of a test.

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