Question

In: Statistics and Probability

Suppose you go to a local casino to gamble using a slot machine. The following probability...

Suppose you go to a local casino to gamble using a slot machine. The following probability distribution characterizes your net earnings on a single play. Assume each play is independent of the other and every play has this same distribution for earnings.

Net earnings ($)

Probability

-1.00

0.90

-0.50

0.07

5.00

0.0285

500.00

0.0015

You play this slot machine one hundred times. Assuming the central limit theorem, what is the chance that you will come out of the casino with a profit?

Solutions

Expert Solution

Let X = Net earning

Let's find the mean and standard deviation for one game by using the given probability distribution:

Where

Let's make table in excel:

From the above table we get

So  the chance that you will come out of the casino with a profit is 0.4912 ( 49.12%)


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