prop firm interview question

Quote from faust:

Fantasy football fans will like this one;

Ticket with two games, Game 1 and Game 2.

Game 1: teams A vs. B with 60/40 slant of team A being the favorite over team B (underdog)

Game 2: teams C vs. D with 50/50 even split to win between C & D

Standard rules, the winning bettors split the total pot.
100 players, each one wagering $1. If you know in advance that 99 other players are betting on team A to win, which game (or team) do you bet on to maximize your returns?

Bon appetite a tout!
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If I understand the question correctly you are asking first which game we would like to play, if any, and then which team we would like to put our dollar on.

The way I understand the question, Game 2 will not be played. If you are the only one betting on that game (there are only 100 players with a buck each, you and 99 others), then you pay $1 to flip a coin to see if you get to keep your money. :-) That is, 50% probability to get back your $1 and 50% probability to lose it. No upside, only downside as all the other money is on the other game.

The same if you play Team A in Game 1 you have 60% probability to get back your dollar. (100 players which all put in $1 with a total prize pool of $100). Only downside here too.

If you play Team B in Game 1, on the other hand, you pay $1 to get a 40% probability to win $99. This is the only option with any upside potential, so this would be the only option I would ever even consider. Even though the odds are stacked against you you get a hefty prize relative to the cost of playing, if you get lucky. :-)

Then again, if you don't like to gamble, if you are far over in the risk averse corner (which I don't think many of us in here are), just keep your dollar and wait for the next best thing to come along. A dollar saved is a dollar earned. :-)
 
On the other hand, if what he means is that you (and 99 other players) pay $1 to buy a ticket where you check off which teams are going to win in both games, I would still tick off Team B on Game 1 and, expecting that the 99 other players are almost evenly distributed bewteen Team A and Team B in Game 2, would be indifferent choosing between Team A and Team B.

My Ticket would either be:

G1:B
G2:A

or

G1:B
G2:B

which would have the same expected profit, which would be higher than the following two tickets:

G1:A
G2:A

and

G1:A
G2:B

I'm getting curious on what the correct answer is now :-)
 
Trading - you take profits from all "betting" both games- just a little from each- but importantly loss smaller than any gains= right call on game pick!
 
perhaps a couple of clarifications are in order;

The actual piece of paper on which the games are printed doesn't matter, it might as well be 2 separate tickets (so that extra information could be ignored, as one simply enters either Game 1 or Game 2, with the specific team indicated.)

Main crux is how to use the Expected Value to quantify the exp return in all possible scenarios (ie., betting on A would yield a $1 back, since would have to split winning purse w/ the other 99 players.. Betting on B would yield a 40% of winning $100 and 60% of losing $1.. Spreading risk between C & D, is [(.50 * $100)+(.50 * -$1)].. Methinks, anyway, though might be conditional AND/OR probability at play here..

Good mental sparring to all, keep 'em coming!
 
I don't get it?

If I owned a trading firm and was hiring traders I would never waste time asking questions like this. Contrary to some people's beliefs, this has nothing to do with trading. A trader is not sitting at his screen trying to figure out how many people are betting on a football game, or at least he had better not be. His mind needs to be on the task at hand, which is employing his or his firm's trading strategies.

Reading things like this just adds more fuel to the fire that prop firms are nothing but scammers. No matter how you answer that absurd question, you will probably be told you are a math wiz and a natural for trading, and then told to cut them a check for $25K and you can start working asap.

(Why doesn't a kid working at Burger King have to put up a deposit to cover spilling french fries on the floor?)
 
Quote from Wazlov:

Statistical analysis is highly unreliable....

90% of all Americans know that!

:p
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Actually, 60% of the time Statistical analysis is right everytime! :)
 
Interesting question...i've never heard this one before. Good question to see if someone understands a zero sum enviroment.

Are you sure you copied the question correctly though? If the only action (99/100) is all bet on Team A (and you're the 100th bet)....the only bet you could make (and make anything back) would be Team B. Even though C vs. D is a (50/50 prob.) there would be no action against your bet....so there is nothing to win.

The money line bet/Vegas line would be something like this...
Team A: -99 (Bet $99 to make $1)
Team B:+99 (Bet $1 to make $99)

And, if team B really did have a 40% prob. of winning; the betting action would somehow reflect this (unless we(the better) came up with that 40% probability...maybe we know some "inside information" or our prob. estimate is just wrong)...
 
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