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Expected Return on Lotteries

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Assume you buy a lottery ticket, which has the odds of one winner for every 1,000 tickets sold; The ticket costs $10 and if you win, you receive $2,500. What is the expected return from buying this lottery ticket? What does the expected return % number mean?

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You have 0.1% chance of winning 2500, and 99.9% chance of getting nothing, and you pay $10 for the ...

Solution Summary

Expected Return on Lotteries

$2.19