The expected value for the given Five possibilities is $6.
We have,
Payoffs of $2, $4, $6, $8, and $10.
Now,
We know that,
The expected value [tex]=\Sigma (x*P(x))[/tex]
i.e. The sum of product of possible outcome and each outcome.
Here, x = Each outcome
And
P(x) = Possible outcomes
So,
Probability of x (Px) [tex]=\frac{1}{5}[/tex],
Now,
According to the above mentioned formula,
i.e.
The expected value [tex]=\Sigma (x*P(x))[/tex]
We get,
[tex]=\Sigma\ (\frac{1}{5} * 2) + (\frac{1}{5} * 4) + (\frac{1}{5} * 6) +(\frac{1}{5} * 8) +(\frac{1}{5} * 10)[/tex]
On solving we get,
[tex]=\Sigma\ (0.4 + 0.8 + 1.2 + 1.6 + 2)[/tex]
i.e.
The expected value = $6
So,
The expected value for given possibilities is $6.
Hence we can say that the expected value for the given Five possibilities is $6.
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