Page 57 - FINAL CFA SLIDES DECEMBER 2018 DAY 3

Session Unit 2:
LOS 9.o: Identify the most appropriate method to solve a 9. Probability Concepts

particular counting problem and solve counting problems
using factorial, combination, and permutation concepts,

p.193

Labelling refers to the situation where there are n items that can each receive one of k different
labels e.g. You got 4 Dogs and have 4 names to label them…, how many ways can you do so?

p.194: The general expression for n factorial is:
n! = n × (n – 1) × (n – 2) × (n – 3) × … × 1 × 0, where by definition, 0! = 1

TI Calculator:
To compute say 4!, Enter [4][2nd][x!] = 24.

Example: Labeling, p.194: Consider a portfolio consisting of eight stocks. Your goal is to designate 4 of the

stocks as “long-term holds,” 3 of the stocks as “short-term holds,” and 1 stock as “sell.” How many ways
can these eight stocks be labeled?