Suppose that we win 3 dollars if we flip a heads on a coin toss, but lose 2 dollars if we flip tails. What is the expected value, in dollars, of our winnings after one flip?
P(heads) = 1/2
P(tails) = 1/2
Expected value =
amt won * probability - amt lost * probability = 3(1/2) - 2(1/2) = 3/2 - 1 = 1/2 dollar = 50 cents
THANK YOU! You are correct!