Baruch MFE Baruch MFE Facebook Contest

[dstefan]

The solution is posted on FB. This is a classical interview question, which many people get wrong; the fact that real-life probabilities do not influence option prices (at least in a binomial model) is what the question is after.

 

[dstefan]

Second Day results:
Ashwani Singh 0 points
Alex Hawat 0 points
Hila Fogel Yaari 0 points
Pankaj Kalia 0 points
Devdeep Sarkar 1 point
Brad Warren 3 points
Canny Cao 0 points

Overall Scores:
Brad Warren 3 points
Devdeep Sarkar 2.5 points
Ashwani Singh 1 point
Alex Hawat 1 point

 

[Devdeep]

Second Day results:
Ashwani Singh 0 points
Alex Hawat 0 points
Hila Fogel Yaari 0 points
Pankaj Kalia 0 points
Devdeep Sarkar 1 point
Brad Warren 3 points
Canny Cao 0 points

Overall Scores:
Brad Warren 3 points
Devdeep Sarkar 2.5 points
Ashwani Singh 1 point
Alex Hawat 1 point

Dear Prof. Stefanica,

I was just wondering whether you had, by any chance, missed my first elaborate answer. I had proved what "Delta" should be in this case and hence calculated the correct value of the Put (hedging argument)? It would be greatly appreciated if you could let me know why it is not a 3-pointer and whether there is anything wrong with it.

 

[dstefan]

it is correct, but we chose only one answer, which we found most elegant.

 

[Devdeep]

it is correct, but we chose only one answer, which we found most elegant.

- Then it is completely understandable.

 

[dstefan]

The third question will be posted at 12noon EST today.

 

[AlexandreH]

I will be out at 12noon EST today and tomorrow. I will try to solve it from fb for bb. :p

 

[dstefan]

I will be posting remotely tomorrow as well, hoping it will work...

 

[dstefan]

Third question posted at http://www.facebook.com/BaruchMFE

Good luck!

 

[dstefan]

Third Day results:
Ashwani Singh 3 points
Alex Hawat 2 points
Devdeep Sarkar 2 points
Hila Fogel Yaari 1 points
Brad Warren 1 point
Rishabh Parakh 1 point
Mutiang Yang 0 points

Overall Scores:
Devdeep Sarkar 4.5 points
Brad Warren 4 points
Ashwani Singh 4 point
Alex Hawat 3 points
Hila Fogel Yaari 1 points
Rishabh Parakh 1 point

 

[AlexandreH]

In three hours, the first question will be asked on the Baruch MFE Facebook page. They will be typical phone interview questions, with a correct brief answer and a more involved answer showing a deeper understanding. Looking forward to it!

A reminder about the rules:

Scoring:
2 points - every correct answer submitted in the first 5 minutes after the question is posted
(suggestion: post your answer as close to the 5 minute mark as possible )
1 point - every correct answer submitted in the first 30 minutes after the question is posted, but later than the first 5 minutes
3 points - the three best answers submitted within one hour of the question being posted

Is the post above correct or has it been modified?
No one got a right answer for the first question in the first 5 minutes?
Also, are the 3 points given to the THREE best answers or to THE best answer?
Thank you.

 

[dstefan]

Alex - first of all, there was a typo in the rules: 3 points are awarded for the best answer, not for the best three answers. Sorry about that. The first two questions were scored according to the rule stated here.

Three people submitted the correct answer within the first five minutes. One of them also had what was deemed the best answer, and was awarded 3 points for it (instead of 2 points).

 

[AlexandreH]

Alex - first of all, there was a typo in the rules: 3 points are awarded for the best answer, not for the best three answers. Sorry about that. The first two questions were scored according to the rule stated here.

Three people submitted the correct answer within the first five minutes. One of them also had what was deemed the best answer, and was awarded 3 points for it (instead of 2 points).

Clear. Thank you.

 

[Devdeep]

Also, are the 3 points given to the THREE best answers or to THE best answer?

I had the same doubt AlexandreH... Then figured out the actual rule from Dan's following post:

"but we chose only one answer, which we found most elegant."

I will be driving at Noon today to catch a train at 12:29 PM... so today I will be at the mercy of 3G connection!

 

[dstefan]

The next question might be posted a few minutes early. nonetheless, any answer before 12:05pm New York time will qualify for a 2 points answer.

 

[dstefan]

Fourth Day Results:
Ashwani Singh 2 points
Devdeep Sarkar 1.5points
Alexei Smirnov 1 point
Brad Warren 0 points

Overall Scores:
Devdeep Sarkar 6 points
Ashwani Singh 6 points
Brad Warren 4 points
Alex Hawat 3 points
Hila Fogel Yaari 1 points
Rishabh Parakh 1 point
Alexei Smirnov 1 point

 

[dstefan]

Fifth question will be posted at 12noon, and it will be interesting

 

[Devdeep]

It was indeed interesting!

 

[dstefan]

Fifth Day Results:
Brad Warren 3 points
Jie Fu 1 point
Ashwani Singh 1 point
Alex Hawat 0.5 point
Devdeep Sarkar 0 points

Overall Scores:
Ashwani Singh 7 points
Brad Warren 7 points
Devdeep Sarkar 6 points
Alex Hawat 3.5 points
Hila Fogel Yaari 1 points
Jie Fu 1 point
Rishabh Parakh 1 point
Alexei Smirnov 1 point

 

[dstefan]

The last question will be posted in 49 minutes. It is a really interesting one, often asked in interviews.

2 points for any correct solution posted within 15 minutes of the problem being posted. Take your time and enjoy!