A venture capitalist, willing to invest $1,000,000, has three investments to choose from. The first investment, a software company, has a 10% chance of returning $11,000,000 profit, a 31% chance of returning $3,500,000 profit, and a 59% chance of losing the million dollars. The second company, a hardware company, has a 5% chance of returning $10,000,000 profit, a 34% chance of returning $1,000,000 profit, and a 61% chance of losing the million dollars. The third company, a biotech firm, has a 11% chance of returning $5,000,000 profit, a 18% of no profit or loss, and a 71% chance of losing the million dollars. Order the expected values from smallest to largest.
A venture capitalist, willing to invest $1,000,000, has three investments to choose from. The first investment, a software company, has a 10% chance of returning $11,000,000 profit, a 31% chance of returning $3,500,000 profit, and a 59% chance of losing the million dollars. The second company, a hardware company, has a 5% chance of returning $10,000,000 profit, a 34% chance of returning $1,000,000 profit, and a 61% chance of losing the million dollars. The third company, a biotech firm, has a 11% chance of returning $5,000,000 profit, a 18% of no profit or loss, and a 71% chance of losing the million dollars.
Order the
For a discrete random variable, X, with probability distribution P(X) , the relation holds true, because the total probability associated with sample space is always 1.
The expected value of X can be given as, . The expected value can be thought as the average value of random variable. X can take any specific values, it can be positive, negative or in fractions depending upon the distribution.
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