In a Game of Chance, the Probability of Winning a $50

question 57

Multiple Choice

In a game of chance, the probability of winning a $50 prize is 40 per cent, and the probability of winning a $100 prize is 60 per cent. What is the expected value of a prize in the game?

• A) $50
• B) $75
• C) $80
• D) $100

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Definitions:

Coupon Payment

A periodic interest payment made to the bondholders during the life of the bond.

Real Return

The rate of return on an investment after adjusting for inflation, representing the actual purchasing power gained or lost.

Purchasing Power

The value of currency expressed in terms of the amount of goods or services that one unit of money can buy.

Inflation

The measure of growth in the overall price level for products and services, devaluing the currency's purchasing power.