[tps_title]Quantitative Interview Questions[/tps_title]
Carl Icahn has decided to bid for Firm A whose unknown true value is a random variable uniformly distributed between $10M and $100 M. Carl does not know the true value – denoted as V – of Firm A. However, as soon as people learn that Carl has made a bid, the news will cause the value of Firm A to double to 2V. Carl’s bid will only be accepted by Firm A’s Board of Directors if it is at least as large as the original value of the firm. How much should Carl bid so that he maximizes his expected payoff?
