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Fair Value: The Six-Sided Die

Easy Β· Probability & Statistics Β· Quant Trader interview question Β· probability, expected-value, mean, discrete-variables, basics

You are pricing a simple financial contract. The contract pays out $𝑋, where 𝑋 is the outcome of a single roll of a fair, six-sided die. To determine the fair price (breakeven point) of this contract without arbitrage, you must calculate the expected value 𝐸𝑋. Calculate the expected value of a single roll of a fair 6-sided die.