6
QuizMultiple Choice

Expected Value

Question 6 of 10 • Mathematics III A

A business has an opportunity to invest $35,000. If the investment is a success, the business earns a profit of $150,000. Otherwise, the investment will result in a total loss of all monies. If the investment has 0.27 chance of success, which equation correctly models the expected value of this investment?

Answer
0
0.27(150,000) + 0.73(–35,000) = E(X)
1
150,000 – 0.73(35,000) = E(X)
0
0.27(150,000 – 35,000) = E(X)
0
0.27(115,000) + 0.73(–35,000) = E(X)
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