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+2 votes
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asked in general by (820 points)  
An investor has a 0.60 probability of making a 20000 dollar profit and a 0.40 probability of suffering a 25000 dollar loss. What is the expected value?
  

1 Answer

+1 vote
answered by (820 points)  
μ, of a random variable x is $\mu = \sum x.P(x)$  for all values of x

Here we will subtract the second value as it is in loss.

$\mu = (0.60)(20000) - (0.40)(25000)$  

$\mu = 2000$
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