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# Section 13.4 - PowerPoint PPT Presentation

Section 13.4. Expected Value. Objectives. Compute expected value. Use expected value to solve applied problems. Use expected value to determine the average payoff or loss in a game of chance. Key Terms.

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## PowerPoint Slideshow about 'Section 13.4' - cara

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Presentation Transcript

### Section 13.4

Expected Value

• Compute expected value.

• Use expected value to solve applied problems.

• Use expected value to determine the average payoff or loss in a game of chance.

• Expected Value: a mathematical way to use probabilities to determine what to expect in various situation over the long run.

• Used to determine premiums on insurance policies, weigh the risks versus the benefits of alternatives in business ventures, and indicate to a player of any game of chance what will happen if the game is played repeatedly.

• The standard way to find expected value is to multiply each possible outcome by its probability, and then add these products.

• We will use EVto represent expected value.

• Determining if a game is fair:

• If a game has an expected value of 0, then the game is called fair.

• A game in which the expected value is not 0 is an unfair game.

Example 1:Calculating Expected Value

• TB pg. 762/1

Example 2:Calculating Expected Value

• TB pg.763/3

Example 3:Calculating Expected Value

• TB pg.763/5

Example 4:Calculating Expected Value

• TB pg.763/7

Example 5:Calculate Price to Make Game Fair

• TB pg.763/9

Example 6:Calculate Price to Make Game Fair

• TB pg.763/11

Example 7:Calculations

• TB pg.763/13

• 1st Calculate EV, Determine Fair, Determine Fair Price

Example 8:Calculations

• TB pg.763/15

• 1st Calculate EV, Determine Fair, Determine Fair Price

Example 9:Roulette Wheel

• TB pg.763/17

• Calculate EV

Example 10:Standardized Test

• TB pg.763/21

• Guessing

Example 11:Standardized Test

• TB pg.764/23

• Guessing

Example 12:Life Insurance

• TB pg.764/25

• Calculate EV

Example 13:Expected Gain/Loss

• TB pg.764/29

• Calculate Gain/Loss

Example 14:Expected Weekly Profit

• TB pg.764/31

• Calculate Profit

• Class work:

• TB pg. 763/2 – 32 Even

• Remember you must write problems and show ALL work to receive credit for this assignment.