Jane Street–styleTraderTraderQuestion #321
Suppose you are offered the opportunity to bet on a coin flip resulting in heads, with the odds increasing from 1.5:1 up to 7:1. Explain your reasoning for whether you would bet or not bet at each odds level.
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State the assumptions, try a simple case, then work toward a general solution. Check the result and explain how it changes if an assumption changes.
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More Jane Street–Style Trader Questions
A car has a uniformly distributed value between 0 and 1000. If you bid less than this value, you get nothing but keep your bid. If you bid more than this value, you can sell the car for 1.5 times the value. What should you bid? The surface of a 3x3 block is painted. The block is split into 27 cubes and one is dropped on the floor. What is the probability that no visible face is painted? If no visible face is painted, what is the probability that it is the center cube?You flip 4 fair coins and receive $1 for each coin that lands heads. What is the expected value of your total winnings?If you roll two dice, and you have the option to roll again and get paid the highest roll, when is it optimal to reroll?What is 2,000,000 minus 2,022?How many digits does 99 raised to the 99th power have?
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