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Compute expected payoff of reroll dice game

CitibankData Scientist · Online Assessment

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This question evaluates understanding of probability theory and expected-value computation in stopping-time processes, including conditioning and infinite-series reasoning, and also tests modeling of per-trial costs and break-even analysis.

You roll a fair six-sided die repeatedly. After each roll you immediately receive an amount equal to the face value. If you roll 4, 5, or 6 you must roll again; the game stops the first time you roll 1, 2, or 3. Derive the expected total payout. Show all steps (conditioning on the stopping time or using an infinite series). Then generalize to a biased die where P(roll in {4,5,6}) = p and the expected value of a single roll is μ; express the expected total payout in terms of p and μ. Finally, suppose each roll after the first incurs a fixed cost c; derive the break-even c that makes the game fair.