AppliedNumeric answer
A value will move up or down with equal probability. Twenty percent of traders know which, and trade in that direction; the rest buy or sell at random. You see two buys in a row from independent traders. What is the probability the value is going up? Give a decimal to three places.
Answer with a number. Fractions, powers and expressions like 23/6 or C(52,5) are read correctly in practice.
The worked solution is in Premium
The answer, the full working and the one idea to take away – for this and all 1,322 questions in the bank. Answer it in practice and your working is marked, with a known mistake named when you make one.
Learn the method
Reported in interviews at
More market making questions
- Who is on the other side?, part 1 of 3Foundation
- Ignore fees, inventory risk and risk aversion entirely.Applied
- Your passive fills capture a half-spread of 2 cents a share and earn a rebate of 0.2 cents.Applied
- Your offer is lifted for large size a fraction of a second after a headline you…Applied
- Who is on the other side?, part 2 of 3Applied
- Quoting with inventory, part 2 of 3Applied