Reading 8: Probability Concepts-LOS i习题精选 increase, investment, class, discount, div

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Session 2: Quantitative Methods: Basic Concepts
Reading 8: Probability Concepts

LOS i: Explain the use of conditional expectation in investment applications.

 

 

 

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.

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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.

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This is a conditional expectation. The analyst indicates how an expected value will change given another event.

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A conditional expectation involves:

A) calculating the conditional variance.

B) determining the expected joint probability.

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

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A conditional expectation involves:

A) calculating the conditional variance.

B) determining the expected joint probability.

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

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Conditional expected values are contingent upon the occurrence of some other event. The expectation changes as new information is revealed.

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