Probability - Basic Terminology- Before we learn about the probability concepts, it is important to know the basic terminology.
**Ra...

## COURSE

## Probability Concepts

This course is a part of CFA Level I Study Material.

You will learn about probability theory and its applications in measuring risk in investments.

#### Course Downloads

Study Notes for CFA Level I

- There are two important properties of probability. - The probability of an event E is between 1 a...
- There are three types of probabilities: <table><tbody><tr><td width="149"><strong>Empirical Probabi...
- The probabilities can also be stated in terms of odds. For example, odds for an event or odds agains...
- Let’s say you are asked the following question: > What is the probability of your portfolio earning...
- ### Addition Rule The additional rule determines the probability of atleast one of the events occur...
- Joint probability refers to the multiplication rule of probability. This is the probability that bot...
- This refers to the [addition rule](https://financetrain.com/multiplication-addition-total-probabilit...
- Two events are said to be independent if the occurrence of one event is in no way affected by the oc...
- If two events are independent, then the [joint probability](https://financetrain.com/joint-probabili...
- As we learned earlier, the [total probability rule](https://financetrain.com/multiplication-addition...
- Expected value is an important concept in investments. An investor will make use of expected value t...
- We can also calculate the [variance and standard deviation](https://financetrain.com/variance-standa...
- We can use the concept of conditional probabilities to arrive at the conditional expected values. Co...
- Both [correlation and covariance](https://financetrain.com/coefficient-variation/ "Coefficient of Va...
- We earlier learned about how to calculate the [expected value](https://financetrain.com/expected-val...
- We learned about how to calculate the [standard deviation of a single asset](https://financetrain.co...
- Bayes’ Theorem formula, also known as Bayes’ Law, or Bayes’ Rule, is an intuitive idea. We adjust ou...
- Counting problems have to do with counting the total number of outcomes or logical possibilities of ...
- ### Combination Formula This is a special case of [multinomial formula](https://financetrain.com/mu...

## LESSONS

Two Defining Properties of Probability

Empirical, Subjective and Priori Probability

State the Probability of an Event as Odds

Unconditional and Conditional Probabilities

Multiplication, Addition and Total Probability Rul...

Joint Probability of Two Events

Probability of Atleast One of the Events Occuring

Dependent Vs. Independent Events in Probability

Joint Probability of a Number of Independent Event...

Unconditional Probability Using Total Probability ...

Expected Value of Investments

Calculating Variance and Standard Deviation of Sto...

Conditional Expected Values

Calculating Covariance and Correlation

Expected Value of a Portfolio

Variance and Standard Deviation of a Portfolio

Bayes’ Theorem

Multiplication Rule of Counting

Permutation and Combination Formula