Unit 1: Probability Concepts

Question 1

Stochastic variables

Answer 1

Variables representing potential outcomes of a probabilistic event, an event to which we attribute a certain amount of uncertainty.

Question 2

Probability distribution

Answer 2

A set of probabilities, defined over a state space such that each element of state space has one probability associated with it.

The sum of all probabilities must add to one.

Question 3

Probability

Answer 3

A numerical value that quantifies the amount of uncertainty with which a particular outcome is realised.

This is a real number in the interval [0, 1], where 0 represents absolute certainty that the outcome will not be realised and 1 represents absolute certainty of its realisation.