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Odds & Expectation
Odds & Expectation
Odds & Expectation
Objectives: Compute the odds in favor of and against an outcome Compute odds from probability Compute probability from odds Compute expected value
1. A card is drawn from a standard deck of 52 cards. (a) Find the odds in favor of getting an ace. Video
Lesson 11
C. Expected Value
Another concept related to odds and probability is expectation, or expected value. Expected value is used to determine the result that would be expected over the long term in some sort of gamble. It is used not only for games of chance, but in areas like insurance, management, engineering, and others. The key element is that the events in question must have numerical outcomes. To find expected value, multiply the numerical result of each outcome by the corresponding probability of the outcome, then add those products. The expected value for the outcomes of a probability experiment is E = X1 P(X1) + X2 P(X2) + + Xn P(Xn) where the X s correspond to the numerical outcomes and the P(X)s are the corresponding probabilities of the outcomes.
4. When a single die is rolled, find the expected value of the outcome.
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5. One thousand tickets are sold at $1 each for a color television valued at $350. What is the expected value if a person purchases one ticket? Video
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7. With his house in foreclosure, a homeowner comes up with a plan to salvage the situation: he sells 10,000 raffle tickets at $50 each for the home, which is valued at $200,000. Find the expectation from buying one ticket. Video