Interview Question

Graduate Trader Interview

-Sydney

IMC Trading

Flipping of a coin. Heads $20, tails -$5. Do you like this game. Second game, $20million heads, tails -$5. Do you prefer the second game? Last game is the same values as the first game, we can play it once or 100 times which would you prefer and why?

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4 Answers

2

I think actually the question is about three games. You should prefer the second game because the expectation is higher: 20mill*.5+(-5)*.5 = almost 10 mill rather than 20*.5+(-5)*.5=7.50 The third game is the same as the first game but you can play it once or 100 times. You want to play it 100 times because of the law of large numbers

JM on

1

You would want to play 100 times to reduce the overall variance of the game

Anonymous on

1

Is it a fair coin?

Anonymous on

3

Hello! Why the second game is the same value of the first one? thanks

Frank on

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