Find the variance of each of the following bets from the class notes. Which bet is riskiest
and which best is safest?

i. You get $5 with probability 1.0.
ii. You get $10 with probability 0.5, or $0 with probability 0.5.
iii. You get $5 with probability 0.5, $10 with probability 0.25 and $0 with
probability 0.25.
iv. You get $5 with probability 0.5, $105 with probability 0.25 or lose $95
with probability 0.25.

Question

Find the variance of each of the following bets from the class notes. Which bet is riskiest 
and which best is safest? 
 
i.  You get $5 with probability 1.0. 
ii.  You get $10 with probability 0.5, or $0 with probability 0.5. 
iii.  You get $5 with probability 0.5, $10 with probability 0.25 and $0 with 
probability 0.25. 
iv.  You get $5 with probability 0.5, $105 with probability 0.25 or lose $95 
with probability 0.25.