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## For any questions: Alp Eren AKYÜZ – alperen.akyuz@boun.edu.tr

Chapter 4:
 Probability Definitions
o Probability
o Event
o Simple
o Event
o Sample space
 Types of Probability
o A priori classical probability
 An example
o Empirical classical probability
 An example
o Subjective probability
 An example
o The differences between the three above. Their calculation methods.
 Simple vs. Joint Probability
o Definitions
o Differences
 Mutually Exclusive Events
o Definition
o Example
o Counter-example
 Collectively Exhaustive Events
o Definition
o Example
o Counter Example
 Constructing Contingency Tables
 Computing Joint and Marginal Probabilities
o Formulae
o Calculating from a given contingency table
 Probability Summary
o Certainty
o Uncertainty
o Impossibility
 General Addition and Multiplication Rules
o Solve examples
 Computing Conditional Probability
o Solve examples w’th cont’ngency tables and decision trees
 Statistical Independence
o Definition
o Give an example
 Bayes’ Theorem
o Definition
o Formula
o Example

Chapter 5:
 Definitions
o Random Variable
 Discrete RV
 Continuous RV
o Probability Distribution
 Condition of being Mutually Exclusive and Collectively Exhaustive
 Representing the discrete probability distribution with a
 Simple chart
 Bar chart
 Expected Value
o Example
 Dispersion with RVs
o Example
 Covariance
o Definition
o What happens if
 Positive
 Negative
 Zero
o Example
 The Sum of Two Random Variables
o Expected value
o Variance
o Standard Deviation
 Portfolio Expected Returns and Expected Risk
o What represents expected returns?
o What represents expected risk?
o Example
 Important Probability Distributions
o What are the three important discrete probability distributions?
o What are the three important continuous probability distributions?
 Binomial Distribution
o When to apply?
o What are its properties?
o What is its formula?
 What are the three values you need to calculate a binomial probability?
 Example
o What are its characteristics?
 Mean
 Variance
 Standard Deviation
o How does its shape look as n increases and p approaches to 0.5?
 Poisson Distribution
o Area of opportunity
o When to apply?
o What is its formula?
 What are the two values you need to calculate a Poisson probability?
 Example
o How does its shape look for different lambda values?
o What are its characteristics?
 Mean
 Variance
 Standard Deviation
 What is the relationship between its mean and variance?
 Hypergeometric Distribution
o What difference is there, between the Binomial and Hypergeometric Distribution?
o What are the four values needed in calculating a Hypergeometric probability?
o What is its formula?
 Example
o What are its characteristics?
 Mean
 Variance
 Standard Deviation
o Example