<t>My editor (who knows nothing about options) gave me a poor-quality photocopy of a simple plain vanilla call payout using Black Scholes, and asked me to reproduce it in a spreadsheet so that she could insert it into an article. She insisted however that my call look exactly like hers, and that I p...

Anyone know of a good site that has a collection of cases/situations that highlight how people have general misunderstanding of probability theory? Looking for games, puzzles, or real-life scenarios involving probabilities that will, say, trip up an interview candidate or an audience.

Swimmer can change direction at any moment; runner can also wait, move, or change direction as needed to beat the swimmer to the edge.

<t>This problem is the generalization of the "circle pool" brainteaser posted in this forum in 2004. There it was noted that a strategy exists to escape from the pool if runner is only 4x faster than the swimmer, I believe. At some speed of course the swimmer cannot reach the edge in time no matter ...

In a circular swimming pool, I start in the middle and swim in any direction at speed s. You stand outside the pool on the perimeter. How much faster do you have to run, in terms of s, to ensure you can tag me whenever I reach the edge?

<t>Hi, thanks for the pathological cases here, but what about the original question. Is computing standard deviation using simple returns = committing a statistical crime? Would a statistician approve using simple returns if applied consistently and conscientiously, or disapprove with a more rigorou...

<t>Hi,Hedge fund industry practice is to compute standard deviation (and thus Sharpe ratio + myriad of other statistics) using simple returns, not log returns. A colleague believes this practice is "seriously flawed" and "statistically biased". We don't disagree that log returns are in many contexts...