# Fundamental concepts of probability

It is made up of these 6 Sample Points: What is the probability that it will come up heads on the sixth flip. What is the probability of drawing either a spade or face card.

The first assertion is a restatement of the last observation. What is the probability of drawing either a spade or face card. Exhaustive events refer to the need to incorporate all potential outcomes in the defined events. What is the probability that a blue marble gets picked. Subjective Probabilities Relationships must be stable for empirical probabilities to be accurate and for investments and the economy, relationships change. You draw a card from a deck of cards, put it back, and then draw another card.

For expected rate of return, the range of outcomes naturally depends on the particular investment or proposition. Their faulty reasoning may go something like this: Once the first card chosen is an ace, the probability that the second card chosen is also an ace is called the conditional probability of drawing an ace. Conditional Probabilities Often it is required to compute the probability of an event given that another event has occurred. What is the probability of selecting a boy.

Now define P3 as the probability that the third person drawn does not share a birthday with anyone drawn previously given that there are no previous birthday matches.

The Defining Properties of Probability Probability has two defining properties: Of course, we know that past performance does not guarantee future results, so a purely empirical approach has its drawbacks.

Then subtract this value from 1 to compute the probability of getting a 6 or a head. What is the probability that the number 1 will not appear on any of the throws. The answer will be 1 minus this probability. Repeat the experiment from Example 3, but this time we put the ball picked on the first draw back in the bag before drawing a second ball i.

What is the probability that both balls are red. If you draw two cards from a deck, what is the probability that you will get the Ace of Diamonds and a black card. We use probability concepts to ask what the chances are that our event will take place. The second assertion is a consequence of two applications of the first since We now prove the third assertion.

The two events are 1 first toss is a head and 2 second toss is a head. Hey, let's use those words, so you get used to them: If you know the probability of an event occurring, it is easy to compute the probability that the event does not occur. Since after an ace is drawn on the first draw, there are 3 aces out of 51 total cards left. Thus, there is a need to qualify this second property to ensure the events are properly defined mutually exclusive, exhaustive. A occurs and B does not occur B occurs and A does not occur Both A and B occur This use of the word "or" is technically called inclusive or because it includes the case in which both A and B occur.

How exactly does the analyst arrive at these probabilities. Now for some examples. These terms refer to the particular approach an analyst has used to define the events and make predictions on probabilities i.

But many people believe that a tail is more likely to occur after throwing five heads. For expected rate of return, the range of outcomes naturally depends on the particular investment or proposition. Answer What is the probability of selecting a boy who is 10 years of age?.

Probability concepts help define risk by quantifying the prospects for unintended and negative outcomes; thus probability concepts are a major focus of the CFA curriculum.

I. Basics Random Variable. The fundamental concepts of probability theory are then viewed in a new light: random variables become measurable functions, their mathematical expectations become the abstract integrals of Lebesgue, etc.

Chapter 3: The basic concepts of probability Experiment: a measurement process that produces quantifiable results (e.g. throwing two dice, dealing cards, at poker, measuring heights of people, recording proton-proton collisions).

Probability. How likely something is to happen. Many events can't be predicted with total certainty. The best we can say is how likely they are to happen, using the idea of probability.

Tossing a Coin. When a coin is tossed, there are two possible outcomes. Roadmap Basic Concepts of Probability and Counting Pages - I Counting events, and The Fundamental Counting Principle I Theoretical probability and statistical probability This section introduces the concept of a sample space, a list of all possible.

Brief overview of basic probability concepts, including conditional probability, Bayes' Theorem and independent events.

Observation: We now state the fundamental properties of probability, using the usual set notation (see .

Fundamental concepts of probability
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Basic Probability Concepts