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PLEASE HELP. There is a 40% chance that you will lose $25,000 if you invest...

PLEASE HELP. There is a 40% chance that you will lose $25,000 if you invest...
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PLEASE HELP.

There is a 40% chance that you will lose $25,000 if you invest...

PLEASE HELP. There is a 40% chance that you will lose $25,000 if you invest...-example-1
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User Rodolfo
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8.1k points

1 Answer

5 votes
This is a weighted average basically take the percentages and multiply them by the amount. The total sum is the amount you will make.

0.4(-25000) + 0.25(0) + 0.35(40000)
-10000 + 0 + 14000
4000 is the expected value
answered
User Attila Fulop
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8.4k points
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