Compute expectations, conditionals, odds, and distributions
Overview
This question evaluates proficiency in fundamental probability and statistics concepts — including expected value and variance, conditional probability, discrete arrival modeling, betting odds and the Kelly criterion, and combinatorics for draws without replacement — and is categorized under Statistics & Math.
Fast Probability and Statistics (No Calculator)
Context: Answer quickly with mental math and concise reasoning. Show set-up and any helpful shortcuts.
1) Expected Value and Variance
A gamble pays +6 otherwise. Compute the expected value (EV) and variance (Var).
2) Conditional Probability with Dice
Two fair dice are rolled. Given that the sum is at least 9, what is the probability that at least one die shows a 6?
3) Distribution Choice for Arrivals
Arrivals occur at an average rate of 3 per minute. Choose an appropriate model for the count in 20 seconds and compute P(X ≥ 2).
4) Gambling Odds and Kelly
Decimal odds for event A are 2.6 while the true win probability is 0.35. Compute:
- The implied probability from the odds.
- The edge/expected return per $1 staked.
- The Kelly fraction (optimal fraction of bankroll to bet), assuming a unit bankroll and standard Kelly.
5) Cards Without Replacement
From a standard 52-card deck, what is the probability of drawing at least one Ace in three draws without replacement? Show quick mental-math steps.
Solution
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