Suppose in a match-up between Collingwood and Carlton there is an office pool with $300 bet on Collingwood and $100 bet on Carlton, with the winning bettors collecting the bets of the losing bettors, and dividing it amongst themselves. What is the probability that Collingwood wins according to the market? (assume risk neutral) What is the net rate-of return from a winning bet on Carlton? What is the expected net rate-of return from betting on Carlton using the market probabilities?

Answer rating: 100% (QA)

To determine the implied probability of Collingwood winning according to the market we first need to ... View the full answer