Question

If the odds in favor of Fast Leg winning a horse race are 7 to 5 and the first prize is $36,000, what is the expected value of Fast Leg's winnings?

Answer 1

EXPLANATION

If the odds in favor are 7 to 5.

The expected value is a predicted value calculated by multiplying a value by its probability.

The probability is given by the following relationship:

$\text{Probability}=\frac{\text{Odd in favor}}{\text{Total number of outcomes}}$

In this case, odds in favor = 7

Total = 7 + 5 = 12

Replacing terms:

$\text{Probability}=\frac{7}{12}=0.58$

Now, we need to calculate the expected value by multiplying the Probability to the First Prize as shown as follows:

$\text{Expected Value= 0.58}\cdot\text{ 36,000=2}1,000$

Hence, the expected value is $21,000