SLR 511F: 10 MATHEMATICAL IDEAS EVERYONE SHOULD KNOW and their everyday applications in the real world

Mon. Sept. 19 we will begin TOPIC #3

TOPIC #3: The simplest ideas in probability and and statistics and the mathematics of finance:

(i) The basic ideas behind Probability Theory with examples

Random Processes => SAMPLE SPACE S (all possible outcomes - DRAW TREE DIAGRAM)

SAMPLE SPACE S = {s1,s2,...............,sn}

with probabilities Pr = {p1,p2,...............,pn}

Probabilities and their Properties: INDEPENDENT EVENTS MULTIPLY and MUTUALLY EXCUSIVE OUTCOMES ADD

GIVEN NUMERICAL REWARDS X associated with the outcomes in the sample space S, X = { x1,.....,xk}

with probabilities = { f1,.....,fk} (from the {p1,p2,...............,pn})

E(X) = EXPECTED VALUE of the rewards = x1*f1 +.............+ xk*fk

(ii) Statistics: mean, variance, standard deviation, etc., Surveys, etc.

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