need an simple explanation

[crocd99 0]

oh fcpers i was in my bus. org. class today and this problem came up. in short it was just asking if you should advise a partnership to put up one million dollars to make 20 million but the probablility of making that 20 million is only one in forty.well us poker guys know that the answer is no. because a one in forty chance to make 20 million is only worth 500k bet in the long run to break even, so the invest appears to be a losing on in the long run.well alot of the class didnt quite understand the logic so after class he asked me if i could find a very simple way to explain this.so do you guys have a very elementary way of explaining this

[turd ferguson 1]

You should just tell them all not to be so stupid. That's what I would do. It's pretty simple as it is.

[speedz99 145]

If you make this investment a million times, you will get $20M once every forty times.$20M * (1/40) = $500kSo $500k is you expected value in the long run.$500k < $1M If your expected return is less than your investment you're an idiot.And your classmates are fairly useless if they can't understand that.Is there any other way to explain this? I assume this is what you said.

[blackntan06 0]

You should just tell them all not to be so stupid. That's what I would do. It's pretty simple as it is.

i agree with that one. :-) :-)

[Fullhouse7 0]

You answered it--$1MM to make $20MM or $19MM profit. Easy answer: $19MM x .025(1/40)=$475,000. -EV

[Simpleton 0]

Simple explanation:1/40 is .025 or 2.5% chance..025 times $20,000,000 is $500,000.Simple.

[Fullhouse7 0]

Wrong--you must subtract your initial investment--see my explanation above.Fullhouse7

[grgimpy 0]

You should just tell them all not to be so stupid. That's what I would do. It's pretty simple as it is.

wow, people jumped all over this one. i thought statistics was a prerequisite to business school anyways. i'd feel comfortable with your standing amoung your classmates if i were you.

[crocd99 0]

You should just tell them all not to be so stupid. That's what I would do. It's pretty simple as it is.

i agree with that one. :-) :-)

yeah i think thats what i will say.i dont know why some felt it was hard to grasp. i didnt think it the explanation in class could get much simplier. maybe it was because the company with the one million was in debt and i guess the class just saw the fact that hey this is a good way to get out of debt.well just thought i would make sure it couldnt be explained any easier

[speedz99 145]

Wrong--you must subtract your initial investment--see my explanation above.Fullhouse7

Well...it depends on how you read the question.

put up one million dollars to make 20 million

I read this as a $20M profit.

[crocd99 0]

You should just tell them all not to be so stupid. That's what I would do. It's pretty simple as it is.

wow, people jumped all over this one. i thought statistics was a prerequisite to business school anyways. i'd feel comfortable with your standing amoung your classmates if i were you.

its law school and i feel pretty good among my class mates now

[Ron_Mexico 4,238]

You should just tell them all not to be so stupid. That's what I would do. It's pretty simple as it is.

grinder mj thinks you are funnier than me? No.I still love you though Franky boy.It is Frank isn't it?I like real names better.

[crocd99 0]

Wrong--you must subtract your initial investment--see my explanation above.Fullhouse7

Well...it depends on how you read the question.

put up one million dollars to make 20 million

I read this as a $20M profit.

that is correct

[turd ferguson 1]

You should just tell them all not to be so stupid. That's what I would do. It's pretty simple as it is.

grinder mj thinks you are funnier than me? No.I still love you though Franky boy.It is Frank isn't it?I like real names better.

I wasn't even being funny. That's just what I would say. People like it when you're condescending.Actually, my real name is Caleb. I thought I told you that before, Chris.

[diablo01 0]

Risk to reward ratio:Risk = 1/40 2.5% chance to achieve goal (return of 20 million on investment of 1 million)Return on investment = (Gross return – Initial Investment, 20 million – 1 million) = 19 million : 19 million/1 million = 1900% return on investment : Assuming your initial investment is sunk costs.Risk to reward ratio 2.5% or .025 x 1900% = 47.5% where 100% is a break even proposition. Assuming no tax liability - HAHA big assumption. So you are a little less than a 2 to 1 dog for your money BUT your getting 19-1 pot odds,Can’t forget about the pot odds!Go for it!

[Jeff 0]

oh fcpers i was in my bus. org. class today and this problem came up. in short it was just asking if you should advise a partnership to put up one million dollars to make 20 million but the probablility of making that 20 million is only one in forty.well us poker guys know that the answer is no. because a one in forty chance to make 20 million is only worth 500k bet in the long run to break even, so the invest appears to be a losing on in the long run.well alot of the class didnt quite understand the logic so after class he asked me if i could find a very simple way to explain this.so do you guys have a very elementary way of explaining this

1 in 40 means you should get 40X odds. It has nothing to do with breaking even in the long run. The deal as is plays 20:1 for 40:1 odds

[speedz99 145]

Wrong--you must subtract your initial investment--see my explanation above.Fullhouse7

Well...it depends on how you read the question.

put up one million dollars to make 20 million

I read this as a $20M profit.

that is correct

I love being right.What law school are you in?

[diablo01 0]

All those Donks at the WSOP must need a lesson in Risk to reward ratios.They where laying $10,000 (ofcourse not the satellites but bear with me) to make approx. 4mill after taxes whichi is 400-1 on their investment IF they win (yeah right) against a field of 5600 which all things neing equal(which there not) is 5600-1 against.Donks i tell ya. If i had millions, which i dont, 1 mil to make 20 aint so bad.

[crocd99 0]

Wrong--you must subtract your initial investment--see my explanation above.Fullhouse7

Well...it depends on how you read the question.

put up one million dollars to make 20 million

I read this as a $20M profit.

that is correct

I love being right.What law school are you in?

a shi tty one. widener

[speedz99 145]

Meh...there's no such thing as a shitty law school. My girfriend is going the the application process now...fun stuff.

[Ron_Mexico 4,238]

You should just tell them all not to be so stupid. That's what I would do. It's pretty simple as it is.

grinder mj thinks you are funnier than me? No.I still love you though Franky boy.It is Frank isn't it?I like real names better.

I wasn't even being funny. That's just what I would say. People like it when you're condescending.Actually, my real name is Caleb. I thought I told you that before, Chris.

sorry CalebCaleb? Really

[RhinestoneCowboy 2]

He said simple. If they couldn't figure it out from the way he said it in class, here is what I would try.You are 1 in 40 to make 20 million. For every 40 times to pay the 1 million, you will get 20 million back once.Spending 40 million to make 20 million does not make a lot of sense.

[turd ferguson 1]

sorry CalebCaleb? Really

My father is a pastor.

[Ron_Mexico 4,238]

sorry CalebCaleb? Really

My father is a pastor.

Double sorry.

[turd ferguson 1]

sorry CalebCaleb? Really

My father is a pastor.

Double sorry.

I know. I don't have the heart to tell him I'm an atheist.