Seeing is believing!

Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.

Basic Question 1 of 8

There are ten marbles in a box: one red, three yellow, and six blue. You pick one marble from the box for 75 cents. You win $5 if you pick a red marble, $1 if you pick a yellow marble, and nothing if you pick a blue marble. If you play the game once, what is your expected net gain?

A. $0.35
B. $1.25
C. $0.05

User Contributed Comments 2

User Comment
wundac much more logical with real numbers
khalifa92 then read the example in LOS
You need to log in first to add your comment.
Your review questions and global ranking system were so helpful.
Lina

Lina

Learning Outcome Statements

calculate and interpret the expected value, variance, and standard deviation of random variables;

explain the use of conditional expectation in investment applications;

interpret a probability tree and demonstrate its application to investment problems;

CFA® 2024 Level I Curriculum, Volume 1, Module 3.