Answer to Question #98078 in Statistics and Probability for denis

Question

A game of chance entails tossing three coins. For each head that comes up, the player receives Ksh 1000 and loses Ksh 800 for any tail that comes up. To play the game, one pays Ksh 1500.
Advise a player whether if is advisable to play the game.

Answer 1

Answer: it is not advisable to play the game (a player is expected to lose Ksh).

Solution:

$Expected\,value=-1500Ksh\,[game\,entry]-800Ksh×0.5+1000Ksh×0.5=-1400Ksh$