Question

: The following table summarizes investment outcomes and corresponding probabilities for a particular oil well: x...

: The following table summarizes investment outcomes and corresponding probabilities for a particular oil well:

x = the outcome in $

p(x)

-40,000 (no oil)

.25

10,000 (some oil)

.7

70,000 (much oil)

.05

-Calculate the standard deviation of x.

Math   Statistics-And-Probability   
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Homework Answers

Answer #1

Solution:-

x p(X) x*p(x)
-40000 0.25 -10000
10000 0.7 7000
70000 0.05 3500
sum 1 500

Mean = = X * P(X)

= (-40000* 0.25 ) + ( 10000*0.7 ) + ( 70000*0.05 )

=-10000 + 7000+ 3500

= 500

Mean = =500

standard deviation =X 2 * P(X) - 2  

= (-400002 * 0.25) + ( 100002 *0.7 ) + (70000 2 * 0.05 ) - 5002

  = ( 400000000 + 70000000 + 245000000)-250000

  = (715000000- 250000)

     =714750000

=26734.81

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