A game of chance offers the following odds and payoffs. Each play of the game costs $100,
Question:
A game of chance offers the following odds and payoffs. Each play of the game costs $100, so the net profit per play is the payoff less $100.
What are the expected cash payoff and expected rate of return? Calculate the variance and standard deviation of this rate of return.
Transcribed Image Text:
Probability 0.10 0.50 0.40 Payoff $500 100 Net Profit $400 -100
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Related Book For
Principles of Corporate Finance
ISBN: 978-1259144387
12th edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen
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