||Like it? PLEASE +1 it! Thanks!|
Hedge Fund Job: Must Understand Benford's Law
The folks over at Valleywag are having fun with a Craigslist posting for a hedge fund job. In addition to looking for someone with all the typical quant skills, the ad asks applicants to do the following
1) Prepare a cover letter.
2) Flip a coin 50 times. Record the results on your resume as a sequence of heads (H) or tails (T) symbols.
3) Email your cover letter and resume to us.
Speculation abounds as to what the fund is getting at, but a few commenters suspect it's some sort of honesty test. The idea is that when people try to manufacture randomness on their own, they usually do a bad job. For example, a 25/25 split of heads/tails would be a dead giveaway that the applicant didn't to the assignment. The are other tells too that you could come up with.
An old NYT article explains what's going on, and how it relates to Benford's Law:
Dr. Theodore P. Hill asks his mathematics students at the Georgia Institute of Technology to go home and either flip a coin 200 times and record the results, or merely pretend to flip a coin and fake 200 results. The following day he runs his eye over the homework data, and to the students' amazement, he easily fingers nearly all those who faked their tosses.
"The truth is," he said in an interview, "most people don't know the real odds of such an exercise, so they can't fake data convincingly."
There is more to this than a classroom trick.
Dr. Hill is one of a growing number of statisticians, accountants and mathematicians who are convinced that an astonishing mathematical theorem known as Benford's Law is a powerful and relatively simple tool for pointing suspicion at frauds, embezzlers, tax evaders, sloppy accountants and even computer bugs.
Then again, maybe they're getting at something totally different. Any guesses?
Joseph Weisenthal is the proprietor of The Stalwart and a reporter at paidContent.org. You can email him at jnathan -at- gmail -dot- com or follow him on Twitter here.
Related ArticlesPeter Bernstein on Amaranth: Better to be Wrong Than Too Right
Ways to Find Hedge Fund Information Technology
Are There Really Investors Out There?
Brokers, Dealers, Private Lenders, and Venture Capital
Financial Regulation: Necessary Evil or Evil Necessarily?
Hedge Funds: Outsourcing Investment Services Helps in Ensuring Compliance
Investing In A Weak Dollar
Forex Managed Accounts: 5 Reasons Why Your Financial Advisor Doesn’t Want You to Discover Them.
Distinction between provisions and reserves
Phrase du Jour: Venture Tourist
Two Cows and Venture Capital
SME's - a link between funding and a compliance model
Calculating Carbon-Levered Earnings
CASH – THE BENEFITS AND RISKS
How to Generate New Business Telling People What You Do
10 Things You Need to Know About Mutual Funds
9.3.2 The Small Industries Development Organization: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
Q How can we get our company funded
How About a Plan B for Fund Raising?
Free PDF Download
Sorry, You Can’t Be My Online Friend
By Paul Kedrosky
About the Author: Paul Kedrosky
RSS for Paul's articles - Visit Paul's website
Dr. Kedrosky is currently the Executive Director of the William J. von Liebig Center in San Diego, California. Using an innovative seed capital program, the Center catalyzes the commercialization of technologies from the internationally-ranked University of California, San Diego. Dr. Kedrosky is also a venture investor with Ventures West, Canada's largest institutional venture capital firm, where he is most active in consumer technologies and software. He is currently on the board of Marqui Corporation, a marketing automation software company.
Click here to visit Paul's website.
Why We Worry About the Wrong Things Part II
Bees Nesting and Markets
One Economist to Rule Them All Really Do We Have To
Extreme Value Theory and Jeff Smith
Phrase du Jour Venture Tourist
Related Forum PostsRe: Twitter, Social Networking: What's Your method?
Should FDIC Worry about FHLB?
Re: Should FDIC Worry about FHLB?
Share this article. Fund someone's dream.
Share this post and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
By: Evan Carmichael
By: Evan Carmichael
||Like this page? PLEASE +1 it!|