- CFA Exams
- CFA Exam: Level I 2021
- Study Session 2. Quantitative Methods (1)
- Reading 8. Probability Concepts
- Subject 6. Expected Value, Variance, and Standard Deviation of a Random Variable

###
**CFA Practice Question**

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?

B. $1.25

C. $0.05

A. $0.35

B. $1.25

C. $0.05

Correct Answer: C

Net gain: $0.8 - 0.75 = $0.05

Expected gain: 5 x (1/10) + 1 x (3/10) + 0 x (6/10) = $0.8

Net gain: $0.8 - 0.75 = $0.05

###
**User Contributed Comments**
2

User |
Comment |
---|---|

wundac |
much more logical with real numbers |

khalifa92 |
then read the example in LOS |