TL;DR
The False Positive Paradox: A canonical quantitative trading interview question at foundation difficulty. Commonly asked at Two Sigma, Citadel, DE Shaw.
By Valenke Exam Prep Team·Last updated 2026-06-01
foundationConditional Probability & Bayes
The False Positive Paradox
Asked at: Two Sigma, Citadel, DE Shaw
Problem
A disease affects 1 in 10,000 people. A test for it has 99% sensitivity (true positive rate) and 99% specificity (true negative rate). A randomly selected person tests positive. What is the probability they actually have the disease?
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