Page 42 - FINAL CFA SLIDES DECEMBER 2018 DAY 3
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Session Unit 2:
9. Probability Concepts
LOS 9.h: Calculate and interpret an unconditional probability using the total probability rule.
Variance (from the EV), p180, is the probability-weighted sum of the squared differences
between each possible outcome and expected EPS.
Example: Calculating variance from a probability model: Calculate the variance and
standard deviation of EPS for Ron’s Stores using the probability distribution of EPS from the
table in the previous example.
