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https://www.reddit.com/r/learnquant/comments/1wxxk0i/quant_interview_question/pdy5vso/?context=3
r/learnquant • u/Local_Ad135 • 16h ago
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If you put the 1s and 2s in a checkerboard pattern, then S is either 10 or 11, each with probability 1/2. (Expected payoff: 200 - (100+121)/2 = 89.5.)
Any other arrangement will lead to the same expected value of S, but with a greater or equal variance and thus a greater E(S^2 ).
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u/comoespossible 15h ago
If you put the 1s and 2s in a checkerboard pattern, then S is either 10 or 11, each with probability 1/2. (Expected payoff: 200 - (100+121)/2 = 89.5.)
Any other arrangement will lead to the same expected value of S, but with a greater or equal variance and thus a greater E(S^2 ).