Quant interview prep guides

Indicator Random Variables in Interviews

Indicator random variables interview prep for expected counts, linearity of expectation, matches, collisions, and probability setup.

Candidates who know expected value but need a reusable interview method.

What an indicator is

An indicator random variable is 1 if an event happens and 0 if it does not. Its expected value is the probability of the event.

Why indicators are useful

They turn a complicated count into a sum of simple yes-or-no pieces. Once the count is written as a sum, linearity of expectation does the rest.

Concrete example

If five dice are rolled, define one indicator for each die showing a six. Each indicator has expectation 1/6, so the expected number of sixes is 5/6.

Dependence is allowed

The indicators do not need to be independent for their expectations to add. This is why the method is powerful for matches, collisions, and sampling without replacement.

How to explain it live

Name the event, define the indicator, compute its probability, then sum over all possible positions, pairs, boxes, or objects.

Common mistakes

Candidates often define indicators vaguely. Make the indexed object clear, such as pair i,j matches or box k is empty, before adding expectations.

Practice the pattern

Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.