In: Finance
A game of chance offers the following odds and payoffs. Each play of the game costs $100, so the net profit per play is the payoff less $100.
Probability | Payoff | Net Profit |
0.10 | $700 | $600 |
0.50 | 100 | 0 |
0.40 | 0 | –100 |
a-1. What is the expected cash payoff? (Round your answer to the nearest whole dollar amount.)
a-2. What is the expected rate of return? (Enter your answer as a percent rounded to the nearest whole number.)
b-1. What is the variance of the expected returns? (In the calculation, use the percentage values, not the decimal values for the rates of return. Do not round intermediate calculations. Round your answer to the nearest whole number.)
b-2. What is the standard deviation of the expected returns? (Enter your answer as a percent rounded to 2 decimal places.)