Probability Concepts (2021 Level I CFA® Exam - Reading 8)

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Reading 8 - Probability Concepts
- LOS 8a: define a random variable, an outcome, an event, mutually exclusive events, and exhaustive events bit.ly/2OBNfhd
- LOS 8b: state the two defining properties of probability and distinguish among empirical, subjective, and a priori probabilities bit.ly/2PaMYRQ
- LOS 8c: state the probability of an event in terms of odds for and against the event bit.ly/2J4eQle
- LOS 8d: distinguish between unconditional and conditional probabilities bit.ly/2CSErxo
- LOS 8e: explain the multiplication, addition, and total probability rules bit.ly/2CS9GbL
- LOS 8f: calculate and interpret 1) the joint probability of two events, 2) the probability that at least one of two events will occur, given the probability of each and the joint probability of the two events, and 3) a joint probability of any number of independent events bit.ly/2PCiZPM
- LOS 8g: distinguish between dependent and independent events bit.ly/2NOLfgm
- LOS 8h: calculate and interpret an unconditional probability using the total probability rule bit.ly/2J5KZJk
- LOS 8i: explain the use of conditional expectation in investment applications bit.ly/2J8k8vS
- LOS 8j: explain the use of a tree diagram to represent an investment problem bit.ly/2CRcO7F
- LOS 8k: calculate and interpret covariance and correlation bit.ly/2OzIwfU
- LOS 8l: calculate and interpret the expected value, variance, and standard deviation of a random variable and of returns on a portfolio bit.ly/2Ov21q9
- LOS 8m: calculate and interpret covariance given a joint probability function bit.ly/2NMPN6V
- LOS 8n: calculate and interpret an updated probability using Bayes’ formula bit.ly/2PHUIaY
- LOS 8o: identify the most appropriate method to solve a particular counting problem and solve counting problems using factorial, combination, and permutation concepts bit.ly/2ymBXmY

[@davidajimotokin5257]

I really appreciate you making these Professor, you are among the unsung heroes of society!! :)

[@user-js8ib7xr6q]

28:51 we can use TI BA in this example - 2nd -> Data -> X01 =50 ; Y01= 20; X02 = 40; Y02 = 30; X03 = 30; Y03=50 , that give us synthetic probability distribution

[@RyanInCanada]

what do you hit to compute?

[@user-js8ib7xr6q]

@@RyanInCanada 2nd - stat - (1-v) display - then buttons up and down

[@sulemankunda567]

You made this so easy for me. I was really afraid of probability but now I'm very confident, all thanks to you :)

[@icecream6680]

thank you mister !!

[@evenwins]

this section was the lowest score for my quant methods with a 70%. thank you for this video and practice

[@analystprep]

Glad it helped!

[@crazy_prazy5931]

Thank you for this amazing lecture 😊

[@analystprep]

You're most welcome!

[@KeyserTheRedBeard]

impressive content AnalystPrep. I broke that thumbs up on your video. Keep up the really good work.

[@analystprep]

Much appreciated! If you like our video lessons, it would be appreciated if you could take 2 minutes of your time to give us a review at facebook.com/pg/AnalystPrep/reviews/

[@ImranH59]

5:38 LOS : State the probability of an event in terms of odds for and against the event.

[@rainniwkw]

Thank you

[@analystprep]

You're welcome

[@crystal.holmes]

At 16:25, wouldn't that seem like a conditional joint probability? The heading says unconditional. You are extremely intelligent to retain all of this knowledge and even answers questions, requiring you to put yourself back into the material once again.

[@RyanInCanada]

little feedback for your video at the last part. will be better if you actually show the formula such as labeling formula or factorial formula on the bullet ppoints page. as usual, grateful for the great content

[@analystprep]

Thank you for the suggestion. We will take it into account for next year!

[@priyankathakur964]

Where is the video for Reading 9- Common Probab Distributions , cannot seem to locate it

[@alfarisabuziad9315]

Thank you for the video,
In minute 8:00. How Odds for = P(E) / {1 - P(E)} become P(E) = 1 / 1+9 in the example.
Appreciate your answer :)
Thanks

[@MRJT2006]

Hi Professor, thank you for making these very helpful videos!:) still confused with conditional and joint probabilities. With reference to the basement flooding being conditional if it rained, is that the same probability as a joint probability of both occurrence simultaneously? i.e P(AIB)=P(AB)?

[@analystprep]

Hi Jay. To make it simple, joint probability is the probability of two events occurring at the same time in no particular order. Conditional probability is the probability of one event occurring in the presence of a second event. I hope this helps!

[@colorado-vn5hz]

I have to disagree with Professor Forjan on his comment about the 100-point game being an impossibility.
Highly unlikely? Yes. But there is a non-zero chance it could happen, so it's not "impossible"

[@analystprep]

Very correct, nothing is impossible!