Basic Probability
Probability of a Discrete Variable
Discrete Probability Distributions
Continuous Probability Distributions
Normal Distribution
100
The chance of an event happening
What is probability?
100
It is a mutually exclusive list of all possible numerical outcomes along with the probability of occurrence of each outcome.
What is a probability distribution for a discrete variable?
100
Binomial, Poisson, and Hypergeometric
What are the three main discrete probability distributions?
100
It is a distribution where the values are evenly distributed in the range between the smallest and the largest value.
What is a uniform distribution?
100
- It is symmetrical (mean=median=mode) - It is bell-shaped - Its IQR is 1.33 sd - It has an infinite range
What are the theoretical properties of the normal distribution?
200
Two events that cannot occur during the same time
What are mutually exclusive events?
200
It is the mean of a probability distribution
What is the expected value?
200
It is equal to the sample size (n) multiplied by the probability of an event of interest (π)
What is the mean of a binomial distribution?
200
It is often used to estimate the probability of the time between arrivals.
What is the most common use of the exponential distribution?
200
You subtract the mean and then divide by the Standard Deviation
How do you transform an X into a Z?
300
Between 0 and 1 inclusive
What is the interval of possible values for probability?
300
It is equal to the weight assigned to asset X multiplied by the expected return of asset X plus the weight assigned to asset Y multiplied by the expected return of asset Y.
What is portfolio expected return?
300
Observations ARE dependent on the previous observations, because it uses the number of event of interest in a finite population without replacement.
How does the Hypergeometric distribution differ from the Binomial distribution?
300
1-e^(-λ x)
What is formula for the cumulative exponential probability?
300
μ=0 , σ=1
What are the mean and the standard deviation of the Z distribution?
400
It is used to go from p(B|A) to p(A|B) if the marginal probabilities of the outcomes of A and the probability of B are known, given the outcomes of A.
What is the Bayes' Theorem used for?
400
It is the joint variability of two random discrete random variables
What is the covariance of a probability distribution?
400
It approaches zero as the area of opportunity becomes smaller.
What happens to the probability that two or more events will occur in a certain area of opportunity?
400
It is the probability of the random variable to take a given value
What is a probability density function?
400
Left
What side of the Z does the Z-table show?
500
knowing whether one event occurs does not alter the probability that the other event occurs.
What does "independent events" mean?
500
It is the only case where the variance of the sum of X and Y is equal to the sum of variance of X and the variance of Y
What happens to the variance of the sum of two variables if the variables are independent?
500
The first ranges from 0 to n, the second ranges from 0 to infinity
What is the difference between the possible values of a discrete random variable in a binomial distribution and he possible values of a discrete random variable in a Poisson distribution?
500
It is the only one that is not symmetrical.
How does the exponential distribution differ from the other two continuous distributions (normal and uniform)?
500
convex
How does a normality plot look like for a left-skewed distribution?
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