Using the Terminology of Bayes' Theorem, a Posterior Probability Can

question 96

Multiple Choice

Using the terminology of Bayes' theorem, a posterior probability can also be defined as:

• A) a conditional probability
• B) a joint probability
• C) 1
• D) 0

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Definitions:

CAPM

The Capital Asset Pricing Model is a theoretical framework that explains how the expected return on assets, especially stocks, is related to their systematic risk.

Measure of Return

A financial metric used to quantify the performance of an investment by assessing the gain or loss it generates.

Unit of Risk

A Unit of Risk quantifies the exposure to potential loss in an investment, typically measuring the volatility or variability of returns over a specified period.

Standard Deviation

A measure of the dispersion or variability of a set of values, indicating how much the values differ from the mean of the set.