Reading 8: Probability Concepts-LOS i习题精选

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.

2^#

发表于 2010-4-12 14:49 | 显示全部帖子

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.

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

3^#

发表于 2010-4-12 14:50 | 显示全部帖子

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.

4^#

发表于 2010-4-12 14:51 | 显示全部帖子

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.

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