Ch 3 Uncertainty

Question 1

How to work out the probability of an event

Answer 1

Number of outcomes divided by total number of possible outcomes

Question 2

What is the probability mass function

Answer 2

Function that gives the probability that a discrete random value is exactly equal to a value

Ex . Prob mas’s function of X is P(X=x)

Question 3

What is intrinsic probability

Answer 3

When you can find out probability of something using logic and science

Question 4

What is estimated probability

Answer 4

When asked to estimate a probability of something that cannot be intrinsically measured you use past events in order to gain an idea of a probability

Question 5

What is the estimated probability calculation

Answer 5

Number of times happened divided by number of opportunities to happen

Question 6

What is expected value

Answer 6

When putting value on an uncertain event

Also the mean of the probability mass function

Question 7

Expected value calculation

Answer 7

Probability x the value of that even occurring

Question 8

What is expected present value

Answer 8

Measuring the expected value and what it would be in present time due to the time value of money