The expected value of team A and team B is $ 2.6. Then the correct option is B.
Binomial distributions consist of n independent Bernoulli trials.
The expected value of X will be :
E(X) = np
Two teams, A and B. are about to play a game.
Previous records show that A has an 80% chance of winning, while B has a 20% of winning.
Spectators can either choose to buy regular tickets or special tickets.
A spectator with a special ticket will receive a refund of $2 if team A wins and a refund of $5 if team B wins.
The expected value if team A wins will be
E(A) = 2 × 0.8
E(A) = $ 1.6
The expected value if team B wins will be
E(B) = 5 × 0.2
E(B) = $ 1
Then the total expected value will be
E(A and B) = E(A) + E(B)
E(A and B) = 1.6 + 1
E(A and B) = $ 2.6
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