A Firm Might Be Liable for $10 Million If a Lawsuit

Multiple Choice

A firm might be liable for $10 million if a lawsuit is brought against it. The firm judges that the probability the suit will be brought is .6. In addition, it believes that its chance of winning such a suit (in which case it owes $0) is .7. The firm's overall expected liability is:

A) $6 million.
B) $4.2 million.
C) $3 million.
D) $1.8 million.
E) $1.2 million.