6
Concepts
4
Formulas
1
Decisions
4
Quiz Questions
6 concepts covered in this module.
E(X) = Σ P(xi) × xi. The probability-weighted average of all possible outcomes.
P(A|B) = P(AB) / P(B). The probability of A given that B has occurred.
P(A) = P(A|B)P(B) + P(A|Bc)P(Bc). Weights conditional probabilities by scenario probabilities.
Updates prior probabilities with new information: P(B|A) = P(A|B) × P(B) / P(A). Crucial for updating investment views.
Visual tool showing sequential conditional probabilities. Multiply along branches, add across endpoints.
Var(X) = E(X²) - [E(X)]² = Σ P(xi)(xi - E(X))²
4 essential formulas for this module.
Where: P(xi) = probability of outcome i
Where: P(B) = prior, P(B|A) = posterior
Where: Si = mutually exclusive scenarios
Where: Joint probability of A and B
1 decision frameworks to guide your analysis.
Visual overview of how concepts connect in this module.
This module has 11 flashcards and 4 quiz questions to test your knowledge.
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