On Sunday, February 13, 2022, at SoFi Stadium in Inglewood, California, over 100 million viewers in 200 countries will watch the American Football Conference (AFC) championship team play the National Football Conference (NFC) championship team in the Super Bowl, the National Football League championship game.

During your discussion section this week you learn that Guangchu believes the AFC team will win and is giving 9:1 odds. Yang is a fan of the NFC, and he is giving 4:1 odds. You seek to bet a total of $300 with Guangchu and Yang and capture the maximum guaranteed, risk-free arbitrage profit.

1. How many dollars should you bet with Guangchu?

2. What is your profit?

Please express your answer in dollars, rounded to the nearest integer dollar.

3. Assume Guangchu is making a fair bet. What is the implied probability that Guangchu assigns to the AFC team winning?

Please express your answer in percentage, rounded to the nearest integer percent.

Answer rating: 100% (QA)

To find the optimal bets to capture the maximum guaranteed riskfree arbitrage profit we need to calc... View the full answer