Question

Laverny tosses an unbiased coin. He receives 100 if a head appears and he pays 40 if a tail appears. Find the variance of his gain. 

Answer 1

x. 100. - 40

P(x). 0.5. 0.5

E(x)=0.5(100) +0.5(-40)

= 30

$E(x^2)=0.5(100^2)+0.5(-40)^2$

= 5800

Var(x) =$E(x^2)-E(x)^2$

= $5800-30^2$

=4900