| A Priori Probability | |
 Probability calculated by logically examining existing information. |
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 A priori probabilities are most often used within the counting method of calculating probability. This is because you must use logic to determine what outcomes of an event are possible in order to determine the number of ways these outcomes can occur. For example, consider how the price of a share can change. Its price can increase, decrease, or remain the same. Therefore, according to a priori probability, we can assume that there is a 1-in-3, or 33%, chance of one of the outcomes occurring (all else remaining equal). |
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 Financial Concepts - Diversification? Optimal portfolio theory? Read this tutorial and these and other financial concepts will be made clear. Beta: Why You Should Know What It Is - Learn about a measure that can help investors meet their criteria for risk. Risk and Diversification - Basic introduction into what risk is, the different kinds and why investors should be aware of risk. Also, how diversification can help investors minimize risk. Introduction to Value at Risk (VAR) - Part 2 - Volatility is not the only way to measure risk. Learn about the "new science of risk management". Introduction to Value at Risk (VAR) - Part 1 - Volatility is not the only way to measure risk. Learn about the "new science of risk management". |
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