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Reading 8: Probability Concepts - LOS h ~ Q1-2

Q1. An analyst announces that an increase in the discount rate next quarter will double her earnings forecast for a firm. This is an example of a:

A)  use of Bayes' formula

B)  conditional expectation.

C)  joint probability.

Q2. A conditional expectation involves:

A)   refining a forecast because of the occurrence of some other event.

B)   calculating the conditional variance.

C)   determining the expected joint probability.

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