Pricing a parlay of two independent bets
A bookmaker prices two independent events at decimal odds of each. A parlay (accumulator) pays out only if both legs win, at combined odds equal to the product .
What is the fair price of the parlay, what does the bookmaker offer, and how does the effective margin compare to a single bet?
Show a hint
For independent events, probabilities multiply, and so do the fair decimal odds. Track what happens to the vig when you multiply two already-vigged prices.
Your answer
This one is open-ended. Work it through, then check your reasoning against the full solution.