Question

Question 4 (7 marks) Consider the toss of a coin. The set of possible outcomes is O = \{H, T\}. There is a probability measure P that describes the likelihood of H and T. Suppose that the lottery X pays 10 dollars if H is up, that $E_P(X) = 6$ and that $Var_P(X) = 4$. Determine the amount X(T) of dollars that X pays if T is up as well as the probabil- ity P(H) of heads and the probability P(T) of tails. Show your calculations.

          Question 4 (7 marks)
Consider the toss of a coin. The set of possible outcomes is O = \{H, T\}. There is a
probability measure P that describes the likelihood of H and T. Suppose that the lottery
X pays 10 dollars if H is up, that $E_P(X) = 6$ and that $Var_P(X) = 4$.
Determine the amount X(T) of dollars that X pays if T is up as well as the probabil-
ity P(H) of heads and the probability P(T) of tails. Show your calculations.

Question 4 (7 marks)
Consider the toss of a coin. The set of possible outcomes is O = {H, T}. There is a
probability measure P that describes the likelihood of H and T. Suppose that the lottery
X pays 10 dollars if H is up, that EP(X) = 6 and that VarP(X) = 4.
Determine the amount X(T) of dollars that X pays if T is up as well as the probabil-
ity P(H) of heads and the probability P(T) of tails. Show your calculations.

Added by Colleen F.

Principles of Economics

Gregory Mankiw 8th Edition

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Consider the toss of a coin. The set of possible outcomes is O = {H, T}. There is a probability measure P that describes the likelihood of H and T. Suppose that the lottery X pays 10 dollars if H is up, that E(pX) = 6, and that Var(pX) = 4. Determine the amount X(T) of dollars that X pays if T is up, as well as the probability P(H) of heads and the probability P(T) of tails. Show your calculations.