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What is blossom expected cash flow

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Reference no: EM132951988

Question - Blossom made a friendly wager with a colleague that involves the result from flipping a coin. If heads comes up, Blossom must pay her colleague $12; otherwise, her colleague will pay Blossom $12.

What is Blossom's expected cash flow, and what is the variance of that cash flow if the coin has an equal probability of coming up heads or tails?

Suppose Blossom's colleague is willing to handicap the bet by paying her $16 if the coin toss results in tails. If everything else remains the same, what are Blossom's expected cash flow and the variance of that cash flow?

Reference no: EM132951988

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