Take the 2-minute tour ×
Mathematics Stack Exchange is a question and answer site for people studying math at any level and professionals in related fields. It's 100% free, no registration required.

At the race course, Adam meets his friend Bruce. Bruce offers to receive bets from Adam for a race involved two horses named Gold and Diamond. Bruce suggests even odds for betting on both horses.

However, a bookmaker also offers odds for the same race. The bookmaker gives odds of 3 to 1 for Gold and 0.5 to 1 for Diamond.

Not to disappoint Bruce, Adam has decided to place bets with the bookmaker, as well as with his friend Bruce.

Adam has \$10 in his pocket and is considering the following strategies:

(I) Bet \$4 for Gold with the bookmaker and \$6 for Diamond with Bruce.

(II) Bet \$5 for Gold with Bruce and \$5 for Diamond with the bookmaker.

(III) Bet \$6 for Gold with Bruce and \$4 for Diamond with the bookmaker.

(IV) Bet \$7 for Gold with the bookmaker and \$3 for Diamond with Bruce.

Which strategy is preferable if Adam’s foremost goal is to minimize the possibility of any loss?

A. (I) B. (II) C. (III) D. (IV)

E. It does not matter. Adam should just randomly choose a strategy

share|improve this question
    
Are these British odds or mathematical odds? In other words, do the bookmaker's odds suggest Diamond or Gold is the odds-on favorite? –  Henry Sep 14 '12 at 14:29

1 Answer 1

Answer is A. If Gold wins, Adam gets 4*4=16 from bookmaker. If Gold loses, Adam gets 6*2=12 from Bruce. He puts in 10, so he is always ahead.

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.