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TL;DR

Indicator Variables: The Swiss Army Knife of Expectation: A canonical quantitative trading interview question at intermediate difficulty. Commonly asked at Jane Street, Two Sigma, Citadel, DE Shaw, HRT, SIG.

By Valenke Exam Prep Team·Last updated 2026-06-01
intermediateExpected Value & Variance

Indicator Variables: The Swiss Army Knife of Expectation

Asked at: Jane Street, Two Sigma, Citadel, DE Shaw, HRT, SIG

Problem
(a) In a random permutation of {1,2,,n}\{1, 2, \ldots, n\}, what is the expected number of elements in their "correct" position (fixed points)? (b) At a party of nn people, each person shakes hands with every other person. Then each person independently forgets each handshake with probability 1/212\frac{1}{2}. What is the expected number of pairs where exactly one person remembers the handshake? (c) You deal a standard 52-card deck. What is the expected number of times an Ace appears directly before a King?

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