1. A single roll of a die with an equal probability of it landing on each of its six sides has the following payoffs:

If a value of 1 or 2 appears on the face of the die, the player receives $40.

If a 3 or 4 appear, the player receives $90.

If a 5 or 6 appear, the player receives $116.

a. What is the expected value from a single roll?

b. Would a risk-averse investor be willing to pay the expected value for the opportunity to play?

Answer rating: 100% (QA)

a Possible Possible Probability Result Outcomes Payof... View the full answer