quantitativemethod第四章ppt.pptVIP

* Session outline Definition of probability, probability properties Probability stated as odds 概率表示为赔率 Unconditional vs conditional probabilities Probability rules: multiplication and addition （乘和加） Expected value, variance and standard deviation Bayes’ formula Principles of counting: permutation and combination排列组合 Random variable随机变量: variable for which the outcomes (possible values) are not certain Example: stock returns，Revenues, income, almost any accounting item in general，Interest rates，Exchange rates (except for countries with fixed regime)，Air temperature，Number of car accidents Event: a specified set of outcomes. We can also specify an event as a single outcome. Events are typically denoted by capital letters. 事件通常表现为大写字母 Probability P(E) measures a chance (likelihood) that an event E will occur and is defined by the following properties: The sum of the probabilities of any set of mutually exclusive and exhaustive events equals 1 Mutually exclusive: cannot happen at the same time Exhaustive: together they describe all possible outcomes (values) Special cases: P(E)大于等于0.小于等于1 P（E）=0= E is an impossible event P（E）=1= E is a sure event Quick check Consider two events: A = return on stock X equals 5%. B = return on stock X is below 5%. Are events A and B mutually exclusive? Are they exhaustive? What can you say about P(A) + P(B) ? Define event C such that P(A) + P(B) + P(C) = 1 ? Quick check solutions A = Stock price increases on the day of announcement; B = Stock price remains the same on the day of announcement; C = stock price drops on the day of announcement. A = Stock price increases by more than 3%; B= Stock price change is from 0% to 3%, included; C= Stock price drops. State three mutually exclusive and exhaustive events describing the reaction of a company’s stock price to a corporate earnings announcement on the day of announcement Empirical probability: a relative frequency of occurrence based on historical data. 判断哪种类型的