Matching chips, two draws
A bag holds 3 red and 2 blue chips. You draw 2 chips without replacement. If the two chips are the same colour you win $10; if they are different colours you lose $3. What is the fair value of the game (the expected profit, in dollars, to four decimals)?
Show hints (2)+
- Count matching pairs: C(3,2)+C(2,2)=4 out of C(5,2)=10, so P(match)=0.4 (not 1/2).
- Fair value = 0.4·(+10) + 0.6·(−3).
Answer
Reveal answer →Final answer
2.2 (± 0.001)
Want the full step-by-step worked solution? It's part of Premium - along with a worked solution for every question in the bank.
Asked at: Game-Based Aptitude, Options Market-Making