When playing roulette at a casino, a gambler is trying to decide whether to bet $15 on the number 34 or to bet $15 that the outcome is any one of the five possibilities 00 comma 0 comma 1 comma 2 comma or 3. The gambler knows that the expected value of the $15 bet for a single number is negative 0.79 cents. For the $15 bet that the outcome is 00 comma 0 comma 1 comma 2 comma or 3, there is a probability of StartFraction 5 Over 38 EndFraction of making a net profit of $75 and a StartFraction 33 Over 38 EndFraction probability of losing $15. a. Find the expected value for the $15 bet that the outcome is 00 comma 0 comma 1 comma 2 comma or 3. b. Which bet is better: a $15 bet on the number 34 or a $15 bet that the outcome is any one of the numbers 00 comma 0 comma 1 comma 2 comma or 3? Why?
Accepted Solution
A:
Answer:A) -$3.16; B) A $15 on the number 34Step-by-step explanation:To find the expected value, we multiply the probability of winning by the amount won, multiply the probability of losing by the amount lost, and add the two.The probability of winning is 5/38 and the net profit will be $75:5/38(75) = 375/38 ≈ $9.87The probability of losing is 33/38 and the amount lost will be $15:33/38(-15) = -495/38 ≈ -$13.03We now add these amounts:9.87+-13.03 = -3.16Since the expected value on a single number is -$0.79 and the expected value on any one of the given numbers in the set is -$3.16, the safer bet would be on the number 34.