Defining Properties of Probability
Defining properties of a probability refer to the rules that constitute any given probability. These are:
Introduction to Probability Concepts
Probability is a measure of the likelihood that something will happen. We usually express probabilities as percentages, from 0% (impossible to happen) to 100% (guaranteed). We can express almost any event as a probability. For instance, we can gauge the…
Selecting Data Visualization Types
Guide to Selecting Visualization Types Master data visualization concepts with AnalystPrep’s Free Trial. Common Pitfalls The following are the four common pitfalls that we should avoid while using charts and graphs: Start Free Trial → Strengthen your understanding of selecting…
Unimodal Distribution – Locations of the Mean, Mode and the Median
A unimodal distribution is a distribution that has one clear peak. The values increase first, rising to a single highest point where they then start to decrease. A unimodal distribution can either be symmetrical or nonsymmetrical. A symmetrical distribution is…
The Short-run and Long-run Aggregate Supply Curve
Aggregate supply refers to the total amount of goods and services that firms in an economy are both willing and able to sell at a given price level. We must differentiate between the short- and long-run aggregate supply curves. Practice…
Correlation in CFA Level 1 (With Examples)
Covariance Covariance is a measure of how two variables move together. The sample covariance of X and Y is calculated as follows: $$\mathrm{S}_{\mathrm{XY}}=\frac{\sum_{\mathrm{i}=1}^{\mathrm{N}}\left(\mathrm{X}_{\mathrm{i}}-\overline{\mathrm{X}}\right)\left(\mathrm{Y}_{\mathrm{i}}-\overline{\mathrm{Y}}\right)}{\mathrm{n}-1}$$ A major drawback of covariance is that it is difficult to interpret since its value can vary…
StickyKurtosis
Kurtosis refers to the measurement of the degree to which a given distribution is more or less ‘peaked’ relative to the normal distribution. The concept of kurtosis is very useful in decision-making. In this regard, we have 3 categories of…
Interpreting Skewness
Skewness refers to the degree of deviation from a symmetrical distribution, such as the normal distribution. A symmetrical distribution has identical shapes on either side of the mean. Distributions that are nonsymmetrical have unequal shapes on either side of the…
Downside Deviation
When trying to estimate downside risk (i.e., returns below the mean), we can use the following measures:
