Questions / Quant trading, Numerical judgment
Convert gross odds to edge
A binary ticket costs 0.40 and pays 1 if an event occurs, otherwise 0. Your model gives a 45% event probability. Ignoring costs, what is expected profit per ticket?
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Answer: 0.05 points (1/20)
- Expected payout is 0.45. Subtract the 0.40 cost to get 0.05.
Interview shortcut. EV per binary ticket = probability − price: 0.45 − 0.40.
In the app this has a follow-up where one thing about the setup changes. Try the follow-up.