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4.20. A gambling book recommends the following "winning strategy" for the game of roulette: Bet \(1on red. If red appears (which has probability 1838), then take the \)1profit and quit. If red does not appear and you lose this bet (which has probability 2038of occurring), make additional $1bets on red on each of the next two spins of the roulette wheel and then quit. Let Xdenote your winnings when you quit.

(a) Find P{X>0}.

(b) Are you convinced that the strategy is indeed a "winning" strategy? Explain your answer!

(c) Find E[X].

Short Answer

Expert verified

(a) 0.5918

(b) No

(c) 0.108(Loss)

Step by step solution

01

Given information Part (a)  

If red appears (which has probability 1838), then take the $1profit and quit. If red does not appear and you lose this bet (which has probability 2038of occurring), make additional $1 bets on red on each of the next two spins of the roulette wheel and then quit.

02

Explanation Part (a)  

P(X>0)=P(X=1)

Win on first spin +(Loose on first spin)(win both the next two spins)

1838+203818381838=0.4737+0.1181

=0.5918

03

Given information Part (b)  

If red appears (which has probability1838), then take the $1profit and quit. If red does not appear and you lose this bet (which has probability 2038of occurring), make additional$1 bets on red on each of the next two spins of the roulette wheel and then quit.

04

Explanation Part (b)  

No, because one is betting on Red whose winning probability is:

1838<12

05

Given information Part (C)  

If red appears (which has probability 1838), then take the $1profit and quit. If red does not appear and you lose this bet (which has probability 2038of occurring), make additional $1 bets on red on each of the next two spins of the roulette wheel and then quit.

06

Explanation Part (c)  

X=1p=0.5918

X=-1(L,W,L)(L,L,W)

Where L: loose

W: win

P(X=-1)=( Loose on first spin )( loose exactly one in the next two spins )

=203818382038+203820381838

=2203820381838

=0.2624

07

Calculation Part (c)  

X=-3(L,L,L)

P(X=-3)=( Loose on first spin )( Also loose both the next two spins )

=203820382038

=0.1458

08

Final answer Part (c)  

E(X)=(10.5918)+(-10.2624)+(-30.1458)

=-0.108

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