trader interview questions shared by candidates
A piece of land has a 30% chance of being located over an oil reserve, in which case it is going to be worth 100M. If there is no oil, the land is worth 30M. You are offered an option to buy the land at 40M after inspecting it and ascertaining if there is oil. How much are you willing to pay for this option?
This is a very basic options question, of course. Not being too familiar with options, I did not follow that until it was too late and the interviewer had corrected me. They mislead you slightly by first asking you for the fair value of the piece of land and by asking the question in a fairly convoluted way.
Expected value = 0.3(100m) + 0.7(30m) = 30m + 21m = 51m => option price = 51m - 40m = 11m No?
Every morning, Mike the security guard at CP high school opens all 1000 doors in the building. Let's assume the doors are numbered 1-1000. The next security guard closes all even numbered doors. The third security guard touches all doors that are multiples of 3. If a door is open, he'll close it and vice versa. The fourth guard changes the position of every fourth door (if it's open he'll close it etc.,) and the fifth guard changes the position of every fifth door and so on, until the 1000th guard changes only door 1000. HOW MANY DOORS ARE LEFT OPEN IN THE END?
First part,we are playing Russian roulette, with a standard 6-chamber revolver. I put two bullets in adjacent chambers, spin, point the gun at my head, and pull the trigger. Click. I'm still alive. It's now your turn, and I hand the gun to you, and give you two choices. Would you rather, assuming you want to live, a) Re-spin, aim at your own head and pull the trigger. b) Do not spin, aim at your own head, and pull the trigger Second part, given I spun - what is the probability of me dying this time?