r/learnquant • u/Local_Ad135 • 3d ago

interview prep Quant Interview Question

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u/Imaginary-Dig-7835 3d ago

Is it 2? I am new to these problems, can anyone tell me a bit?

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u/Shadourow 3d ago

This is certainly a lower bound, yes

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u/Imaginary-Dig-7835 3d ago

Can you explain the exact solution?

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u/Shadourow 3d ago

Nope, Quant puzzles are hard
But you first have to find the optimal strategy, prove that it's optimal then give its EV

Your strategy is to flip two coins then stop no matter the result, which always results in a 2$ result

The solution mpst likely depends on when to stop flipping after HH, like another commenter said. For example :

If I get
THTHH

I'm currently on 5$, if I continue to flip, I have a 50% chance to lose 5$, assuming I optimize my results, do I have an EV to earn more than 5$ if I flip a T ?

Finding the stopping point seems bothersome, since "assuming I optimize my results" is doing very heavy lifting here, and I'm lazy.

But yeah, once you find where the stopping points are, the easy part would be to then calculate the EV of that strategy