Scott likes to day trade on the internet. On a good day, he averages $390 gain. On a bad day, be averages a $275 loss. Suppose that he has good days 24% of the time, bad days 36% of the time, and the rest of the time, he breaks even. Let X represent Scott's income from day trading. What is the expected value of Scott's day trading hobby? After 1 month, (30 days), how much money would he expect to make/lose? (In other words, what is the net gain/loss?) Group of answer choices

Respuesta :

Answer:

(i) (-$5.4)

(ii) (-$162) Loss

Explanation:

(a) Probability of good days (P1) = 24% = 0.24 and Gain on a good day = $390

Probability of bad days (P2) = 36% = 0.36 and Loss on a bad day = $275

Probability of rest of the time (P3) = 0.40 and break even

Expected value of Scott's day trading hobby:

= P1 × Gain on a good day + P2 × Loss on a bad day + P3 × $0

= 0.24 × $390 + 0.36 × (-$275) + 0.40 × 0

= $93.6 - $99

= -$5.4

(b) We need to find the money would be expect, after 1 month (30 days):

= 30 days × Expected value of Scott's day trading hobby

= 30 days × (-$5.4)

= (-$162) loss