Answered: A roulette wheel consists of 38 equally…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Question

A roulette wheel consists of 38 equally likely 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 $17 and told that you must pick one of two wagers: (1) Bet $17 on number 35. If the spin results in 35, you win $595 and also get back your $17 bet. If any other number comes up, you lose your $17 or (2) Bet $17 on black. If the spin results in any one of the black numbers, you win $17 and also get back your $17 bet. If any other color comes up, you lose your $17. The probability distribution and expected profit for each wager is shown in the accompanying table. Find the standard deviation for the profit for each type of wager. Which wager would you prefer? Explain.

The standard deviation for the first wager is and the standard deviation for the second wager is?

(Round to two decimal places as needed.)

Which wager would you prefer? Explain.

A. If risk averse, the bet on black is preferred because it has a smaller standard deviation. If risk tolerant, the bet on number 35 is preferred because it has a larger standard deviation.

B. If risk averse, the bet on number 35 is preferred because it has a larger standard deviation. If risk tolerant, the bet on black is preferred because it has a smaller standard deviation.

C. If risk averse, the bet on black is preferred because it has a larger standard deviation. If risk tolerant, the bet on number 35 is preferred because it has a smaller standard deviation.

D. If risk averse, the bet on number

35 is preferred because it has a smaller standard deviation. If risk tolerant, the bet on black is preferred because it has a larger standard deviation.