The Triple $L$ investment club is considering purchasing a certain stock. After considerable research, the club members determine that there is a $50 \%$ chance of making $\$ 10,000$, a $10 \%$ chance of breaking even, and a $40 \%$ chance of losing $\$ 6,200$. Find the expectation of this purchase.
The expected value is $\$ \square$.
Answer
Final Answer: The expected value is \(\boxed{2520}\)
Step 1 ：The Triple L investment club is considering purchasing a certain stock. After considerable research, the club members determine that there is a 50% chance of making $10,000, a 10% chance of breaking even, and a 40% chance of losing $6,200. We are asked to find the expectation of this purchase.
Step 2 ：The expectation of a random variable is the sum of the products of each outcome and its probability. In this case, the outcomes are making $10,000, breaking even (making $0), and losing $6,200. The probabilities are 50%, 10%, and 40% respectively.
Step 3 ：We can calculate the expectation by multiplying each outcome by its probability and then summing these products. The outcomes are $10,000, $0, and -$6,200. The probabilities are 0.5, 0.1, and 0.4 respectively.
Step 4 ：The expectation is calculated as follows: \(0.5*10000 + 0.1*0 + 0.4*(-6200) = 2520\)
Step 5 ：Final Answer: The expected value is \(\boxed{2520}\)
