Answer to Question #246338 in Statistics and Probability for lachicka

Question

Your friend is asking you to invest in his bakery, and you have 35000. The returns are volatile, and you may get either 43000 with a probability of 0.44 or 27000 with a probability of 0.56.

Answer 1

$$E(X)=(43000-35000)(0.44)$$

$$+(27000-35000)(0.56)=-960$$

It is expected that you will lose 960.