Consider the Following Scenario to Answer the Questions That Follow

question 64

Multiple Choice

Consider the following scenario to answer the questions that follow.
Ivett and Brenda are considering playing a game called Twenties Versus Fifties. In this game, Ivett will place a $20 bill on the table, and Brenda will place a $50 bill on the table. Both players will then toss a fair coin. If both Ivett and Brenda toss heads or if they both toss tails, Ivett wins the $70 on the table. If one woman tosses heads and the other tosses tails, Brenda wins the $70 on the table.
-Which of the following is the formula that Brenda would use to compute the expected value (EV) of the game from her perspective?

• A) EV = 0.5 × ($20) + 0.5 × ($50)
• B) EV = 0.5 × (-$20) + 0.5 × ($50)
• C) EV = 0.5 × ($20) + 0.5 × (-$50)
• D) EV = 0.5 × (-$70) + 0.5 × ($50)
• E) EV = 0.5 × ($70) + 0.5 × ($50)

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