You buy a lottery ticket to a lottery that costs $10 per ticket. There are only 100 tickets available to be sold in this lottery. In this lottery there are one $460 prize, two $80 prizes, and four $20 prizes. Find your expected gain or loss.

Expected Loss will be $3

Explanation:

Expected Loss can be calculated by  multiplying the probabilities to Net expected outcome.

Probabilities

Prize ( $460) = 1 / 100

Prize ( $80 ) = 2 / 100

Prize ( $20 ) = 4 / 100

No prize = 100/100 - (1+2+4)/100 = 93/100

Expected value = [( 460 - 10 ) x 1/100 ] + [( 80 - 10 ) x 2/100 ] + [( 20 - 10 ) x 4/100 ] + [( 0 - 10 ) x 93/100] = 4.5 + 1.4 + 0.4 - 9.3 = -$3

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