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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
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User Contributed Comments 2

User Comment
wundac much more logical with real numbers
khalifa92 then read the example in LOS
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I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach

Andrea Schildbach

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.