Concept explainers
More Roulette The previous exercise on roulette described two bets: one bet on the single number 23 with winnings of either $350 or - $10 and a different bet on black with winnings of either $10 or - $10. For both types of bets, the expected winning is - $0.53. Which of the two bets has the larger standard deviation? (Hint: Which bet has outcomes that are, on average, further from the mean?) Which bet would you prefer? Explain.
6.8 Roulette A roulette wheel consists of 38 numbers, 0 through 36 and 00. Of these, 18 numbers are red, 18 are black, and 2 are green (0 and 00). You are given $10 and told that you must pick one of two wagers, for an outcome based on a spin of the wheel: (1) Bet $10 on number 23. If the spin results in 23, you win $350 and also get back your $10 bet. If any other number comes up, you lose your $10, or (2) Bet $10 on black. If the spin results in any one of the black numbers, you win $10 and also get back your $10 bet. If any other color comes up, you lose your $10.
- a. Without doing any calculation, which wager would you prefer? Explain why. (There is no correct answer. Peoples’ choices are based on their individual preferences and risk tolerances.)
- b. Find the expected outcome for each wager. Which wager is better in this sense?
Want to see the full answer?
Check out a sample textbook solutionChapter 6 Solutions
Statistics, Books a la Carte Edition Plus MyLab Statistics with Pearson eText -- Access Card Package (4th Edition)
- Calculus For The Life SciencesCalculusISBN:9780321964038Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.Publisher:Pearson Addison Wesley,Glencoe Algebra 1, Student Edition, 9780079039897...AlgebraISBN:9780079039897Author:CarterPublisher:McGraw Hill