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.
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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