Bayes’ Formula is frequently presented in statistics texts as important (it is), profound (it isn’t, particularly), and difficult (it isn’t, remotely). If you understand conditional probability, then Bayes’ Formula is trivial. Let me show you: We start with the probability of two events, A and B: \[P(AB)\ =\ P(A|B)\ ×\ P(B)\] Similarly, for the probability […]
This article is for members only. You can become a member now by purchasing a
CFA® Level I Quantitative Methods Membership, CFA® Level I Membership
This will give you access to this and all other articles at that membership level.