2. A Ratio is a fraction. Odds are a type of ratio. Fraction s Ratios 1/4 Odds 1:3

3. For example, if you go fishing and you catch 3 largemouth bass and 1 trout, The probability (or risk ) of catching a trout is the ratio below: ratio = # of trout caught = 1 = 0.25 total # of fish caught 4 ***Note that this differs from odds. Odds are simply a ratio of the probability that an event will occur versus the probability that the event will not occur. odds = a type of ratio with respect to probabilty odds = probability 1-probability then the odds of catching a trout = 1/4 1 4 4 1 3/4 = 4 * 3 = 12 = 3 = 0.33 or 1:3 ***Note: With risk, the total is always in the denominator. With odds, the total is the sum of the numerator and denominator.

4. What are the payoff odds if Nicky wins this race? (0.15(1100) – 375) / 375 = 1.49 ~1.50 so 1.50:1 or 3:2 Meaning, for every $1 you bet, you will get $1.50 in return. What is the overall monetary risk if he wins this race? 2/5 = 0.4 = 40% meaning, bidder will get 40% of the $ available

5.  The 3 most Important Financial Ratios: