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Question
In investment, a man can make a profit of ₹ 5,000 with a probability of 0.62 or a loss of ₹ 8,000 with a probability of 0.38. Find the expected gain
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Solution
| X | 5000 | – 8000 |
| P(X = x) | 0.62 | 0.38 |
Let x be the random variable of getting gain in an Investment
E(x) be the random variable of getting gain in an Investment
E(x) = ΣPixi
= (0.62 × 5000) + [0.38 × (– 8000)]
= 3100 – 3040
E(x) = 60
∴ Expected gain = ₹ 60
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