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Die payoff contract

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A contract pays, in dollars, the number shown on one roll of a fair -sided die. What is its fair value in dollars?

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A whole number, a decimal, a fraction like 3/8 or a percent.

Hint

Fair value is the expected payoff.

Solution
  1. All faces are equally likely, each with probability .
  2. The expected payoff is .
  3. The fair value is .

Answer:

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