It Costs $1,000 to Enter the Following Game of Chance,which

question 16

Multiple Choice

It costs $1,000 to enter the following game of chance,which is based on the outcome of a coin toss (fair coin) .If the coin comes up 'heads' then you win and walk away with $1,100,which is a 10% rate of return.If the coin comes up 'tails',then you lose and walk away with $900,which is a -10% rate of return.What is the variance of the returns?

• A) 0.05
• B) 0.1
• C) 0.09
• D) 0.01
• E) 0.5