11.1.1. The following amounts are bets on horses A, B, C, D, and E to win.

Horse Amount

A $600,000

B $200,000

C $100,000

D $75,000

E $25,000

Total $1,000,00

608 Bayesian Statistics

Suppose the track wants to take 20% off the top, namely, $200,000. Determine the payoff for winning with a $2 bet on each of the five horses. (In this exercise, we do not concern ourselves with "place" and "show.")

Hint: Figure out what would be a fair payoff so that the track does not take any money (that is, the track's take is zero), and then compute 80% of those payoffs.

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