Suppose you have a sporting event with m different outcomes for which the odds satisfy Σi=11+0₁ < 1. Which of the following statements are true? a. There exists an arbitrage opportunity in this case. b. There exist risk-neutral probabilities in this case. There is no risk-free profit here, you always have to take some risk in order to win. d. It is possible to construct a betting strategy that produces the constant profit £1 whatever the outcome i. e. It is possible to construct a betting strategy that produces the constant profit £2 whatever the outcome i. C.

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Q: (i) Find his expected gain. (ii) How much should he pay to play the game if it is to be fair?

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Q: If P(A) > 0, P(B) > 0, and P(A n B) = 0, then the events A and B are independent. true or false?

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Q: what should we pay in return each time the sum does not exceed four to make the game fair?

A: Here two dice are rolled  So number of total outcomes = 6×6 = 36

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Q: Prize value Number of prizes £1 million 2 6 11 24 60 116 £100,000 £50,000 £25,000 £10,000 £5,000…

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Q: Prior Probabilities for A1 and A2: P(A1)=0.20, P(A2)=0.40, (A1) and (A2) are mutually exlcusive.…

A: Data given P(A1)=0.20, P(A2)=0.40, (B|A1)=0.20, P(B|A2)=0.05

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Q: events A and B are mutually exclusive, then P(A) + P(B) = 0. True or false?

A: Given that  If two event A and B are mutually exclusive.

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A: Given data is The events C and D are mutually exclusive

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Q: Two events A and B have the following probabilities: P (A) = 0.4, P (B)= 0.5, and P (A and B) =…

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