Determining the expected value

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A coin toss game with one toss has a 50% chance of you making $100 and a 50% chance of you losing $100. The expected value (EV) is 0 and the standard deviation (SD) is 100.

Two such coin tosses in a row give you a 25% chance of making $200, a 25% chance of losing $200, and a 50% chance of making 0. The EV is 0 and the SD is 100 * sqrt(2) or about 141.

Figure out what happens for three, four, and five coin tosses.

Reference no: EM131657519

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