Parlay of two unequal-probability legs
A bookmaker applies a overround to each of two independent legs by inflating their fair implied probabilities by a factor of . Leg A is a true favorite; leg B is a true longshot. A parlay pays only if both win, at the product of the quoted odds.
What is the fair parlay price, what does the bookmaker offer, and what is the effective margin?
Show a hint
Quoted implied probability fair probability, so quoted odds fair odds . What does multiplying two quoted odds do to the factors?
Your answer
This one is open-ended. Work it through, then check your reasoning against the full solution.