If a payout is certain to occur, then the variance of that payout equals
A) zero.
B) one.
C) the expected value.
D) the expected value squared.
Question 2
Sarah buys little stuffed animals for 5 each. They come in different varieties. If the producer stops making (retires) a certain variety, a stuffed animal of that variety will be worth 100; otherwise it is worth 0. There is 50 chance that any variety will be retired. What is the value to Sarah of knowing ahead of time whether a variety will be retired?
A) 50
B) 5
C) 2.50
D) 0
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Example of variance documentation
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