There are 3 lottery tickets one can choose from: <mtable columnalign="right right" rowspacing="

sembuang711q6 2022-05-09 Answered
There are 3 lottery tickets one can choose from:
A l t e r n a t i v e s C h a n c e s O u t c o m e A 1 / 1000 $ 1000 999 / 1000 $ 0 B 1 / 100 $ 100 99 / 100 $ 0 C 1 / 2000 $ 1000 1 / 200 $ 100 1989 / 2000 $ 0
And the formula for computing the probabilities of final outcomes when a coin is flipped between lotteries A   &   B yields
P $ 1000 = 1 2 2 2000 = 1 2000
P $ 100 = 1 2 20 1000 = 10 1000
P 00 = 1 P $ 1000 P $ 100
= 1989 2000
So there are 3 different probabilities here. The first one, P $ 1000 is the probability of the outcome being 1000 dollars, which is (the probability of getting lottery A from the coin flip) x (the probability of the outcome being 1000 dollars). That makes sense from the table above. But the second one, P $ 100 , the probability of the outcome being 100 dollars should be 20 2000 or 1 100 . Why then is it 20 1000 ???
You can still ask an expert for help

Expert Community at Your Service

  • Live experts 24/7
  • Questions are typically answered in as fast as 30 minutes
  • Personalized clear answers
Learn more

Solve your problem for the price of one coffee

  • Available 24/7
  • Math expert for every subject
  • Pay only if we can solve it
Ask Question

Answers (1)

rynosluv101swv2s
Answered 2022-05-10 Author has 19 answers
You have some typos, and this might be clearer
P $ 1000 = 1 2 1 1000 = 1 2000
P $ 100 = 1 2 1 100 = 1 200 = 10 2000
P 00 = 1 P $ 1000 P $ 100 = 2000 2000 1 2000 10 2000 = 1989 2000
Not exactly what you’re looking for?
Ask My Question

Expert Community at Your Service

  • Live experts 24/7
  • Questions are typically answered in as fast as 30 minutes
  • Personalized clear answers
Learn more

Relevant Questions

asked 2022-05-09
Describe the two basic functions of the qualitative risk analysis process and explain why a project manager should perform a qualitative risk analysis prior to quantitative risk analysis.
asked 2022-05-28
What type of information does a business risk analysis give?
asked 2022-05-23
1. Describe Risk Analysis and its impact on financial considerations for new projects.
2. Discuss how the Risk Analysis process allows organizations to meet their due diligence and fiduciary duty.
3. Discuss the two key times the Risk Analysis output will be used.
4. Discuss the elements of a Risk Analysis, including time and cost variables.
asked 2022-06-04
What sort of qualitative behaviour does a stock following a process of the form
d S t = α ( μ S t ) d t + S t σ d W t
exhibit? What qualitative effects do altering μ and α have? What effects do they have on the price of a call option?
My try:
Assume that α < 0 ,. If S t < μ ,, then α ( μ S t ) > 0.. Similarly, if S t > μ ,, then α ( μ S t ) < 0.. This means that if α < 0 ,, then S t is mean-reverting.
Conversely, if α < 0 ,, similar analysis above implies that S t is trend following.
In the derivation of Black-Scholes call option price, mean rate of a geometric Brownian motion does not affect the price as it will be changed into risk-free rate.
As the volatility is the same, α and μ do not have any effect on the price of a call option.
Am I correct?
asked 2022-05-09
Describe the risk analysis approach and the steps in a detailed or formal risk analysis
asked 2022-05-28
The set of primitive recursive functions is [...] the smallest set containing the constant 0, the successor function, and projection functions, and closed under composition and primitive recursion.
My question is about the way composition, which does not seem very intuitive to me
If f is a k-ary function and g 0 , , g k 1 are l-ary functions on the natural numbers, the composition of f with g 0 , , g k 1 is the l-ary function h defined by
h ( x 0 , , x l 1 ) = f ( g 0 ( x 0 , , x l 1 ) , , g k 1 ( x 0 , , x l 1 ) ) .
Is this just another way of stating composition as one may understand it in real analysis: that if we have
g : N l N k and f : N k N ,
then we can define some composed function
h : N l N ?
Or, would there be any "risk" at looking at the definition in this simplistic way?
asked 2022-05-08
Outline the constraints which could be involved in a business risk analysis.