A day trader buys an option on a stock that will return $100 profit if the stock goes up today and lose $400 if it goes down. If the trader thinks there is a 75% chance that the stock will go up,
a) What is her expected value of the option's profit?
b) What do you think of this option?accommodations; 40% will choose the Overnight Plan, which includes one night at the resort; and 40% will choose the Weekend Plan, which includes two nights.
a) Find the expected value of the number of nights poten- tial customers will need.
b) Find the standard deviation of the number of nights potential customers will need.