Imagine an investment with 2 possible outcomes. There's a 60% chance you'll make a $1,000 profit, and a 40% chance you'll earn no profit. What is the expected value of making the investment?
Added by Daniel W.
Step 1
The expected value is calculated by multiplying the value of each outcome by the probability of that outcome. For the $1,000 profit outcome, the expected value is $1,000 * 0.60 = $600. Show more…
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