Question

Suppose a basketball player has made 294 out of 359 free throws. If the player makes the next 3 free throws, I will pay you $20. Otherwise you pay me $26. Step 1 of 2 : Find the expected value of the proposition. Round your answer to two decimal places. Losses must be expressed as negative values.

Answer 1

Answer: -$0.74

Explanation:

Expected value of the proposition is:

= (Probability that player makes next 3 free throws * 20) - (Probability that player does not make the next 3 free throws * 26)

Probability that player does not make the next 3 free throws  = 294/359 * 294/359 * 294/359

= 0.549235557

Expected value of proposition:

= (0.549235557 * 20) - ( (1 - 0.549235557) * 26)

= 10.98471114 - 11.719875518

= -$0.74