ame at a carnival. It costs nothing to play. You can win $5 with probability 0.15 on each round, but if you lose, you pay $2. (a) Let X be the number of times it takes for you to get your first win. What distribution does X follow, and what are the expection and variance of X? (b) If you play until you win once, what is your expected net profit (positive for profit, negative for loss)? What is the variance? (c) You start with $20. What is the probability that you lose all of your money without winning even once?

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You are playing a game at a carnival. It costs nothing to play. You can win $5 with probability 0.15 on each round, but if you lose, you pay $2.

(a) Let X be the number of times it takes for you to get your first win. What distribution does X follow, and what are the expection and variance of X?

(b) If you play until you win once, what is your expected net profit (positive for profit, negative for loss)? What is the variance?

(c) You start with $20. What is the probability that you lose all of your money without winning even once?

Expert Solution
Step 1 (a)

X will follow geometric distribution with p = 0.15 

The distribution of X will be:

Statistics homework question answer, step 1, image 1

The expectation and variance of X will be:

Statistics homework question answer, step 1, image 2

 

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