Question

a person may earn 100,000.00 by investing in the stocks of an international company with a probability of 0.40 or lose 35,000,00 over the same period with a probability of 0.60. Let X denote the net gain of a perspn who will invest in the company construct the probability distribution of X, and the compute for the expected value of a person who will invest in the same company. ​

Answer 1

Probability distribution:

$X=\begin{pmatrix} 100.000 & -35.000 \\ 0.4 & 0.6 \end{pmatrix}$

Expected value:

$E[X]=0.4\cdot100.000-0.6\cdot35.000=19.000$