An example of probabilities in a coin-tossing experiment

Illustrates an example of probabilities in a simple coin-tossing experiment.




1593_Probabilities in a simple coin-tossing experiment.png

Probabilities in a simple coin-tossing experiment: one toss.

Above shows the distribution for the above coin-tossing experiment.

Now here's what your total profit will be like after one thousand tosses as in figure. Your expected profit after one toss is

(1/6) x 10 + (5/6) x (-1) = 5/6 ≈ 0.833

Now variance is as:

(1/6) x (10 - (5/6))2+ (5/6) x (-1-5/6)2 = 605/54

   Related Questions in Financial Management

  • Q : How is the risk into portfolio measured

    How is the risk into portfolio measured in Crash Metrics?

  • Q : Explain different approaches to

    Explain different approaches to modelling in Quantitative Finance.

  • Q : When we can use Numerical quadrature

    When we can use Numerical quadrature numerical method?

  • Q : High operating leverage mean high

    Does High operating leverage mean high business risk. Elaborate the statement.

  • Q : Risk adjusted discount rate A

    A risk-adjusted discount rate improves capital budgeting decision making compared to using a single discount rate for all projects. Explain.

  • Q : Explain distribution of maxima &

    Illustrates an example of distribution of maxima and minima in Extreme Value Theory?

  • Q : Answer Rs. Sales 2,40,000 Variable

    Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax 40% Firm is proposing to buy the new plant that could generate extra annual profit of Rs. 10,000. The fixed cost of new plant is expected to Rs. 4000. New plant would increase sales volume by Rs. 40,00

  • Q : Dfd A bank sells a $3,000,000 FRA for a

    A bank sells a $3,000,000 FRA for a three-month period beginning three months from today and ending six months from today. The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a three-month Eurodollar loan and having accepted a six-month Eurodol

  • Q : How is a Sharpe ratio maximized How is

    How is a Sharpe ratio maximized?

    Answer: Choosing the portfolio which maximizes the Sharpe ratio, will provide you the Market Portfolio.

  • Q : Foreign exchange transactions among

    How are foreign exchange transactions among international banks settled?
    The interbank market is network of correspondent banking relationships, along with large commercial banks maintaining demand deposit accounts along with one another, known a

2015 ┬ęTutorsGlobe All rights reserved. TutorsGlobe Rated 4.8/5 based on 34139 reviews.