A Priori Probability
Probability calculated by logically examining existing information. Investopedia Says:
A priori probabilities are most often used within the counting method of calculating probability. This is because you must use logic to determine what outcomes of an event are possible in order to determine the number of ways these outcomes can occur.
For example, consider how the price of a share can change. Its price can increase, decrease, or remain the same. Therefore, according to a priori probability, we can assume that there is a 1-in-3, or 33%, chance of one of the outcomes occurring (all else remaining equal). Related Terms:
Beta
Conditional Probability
Event Risk
Prior Probability
Risk
Subjective Probability
Systematic Risk
Unconditional Probability
Volatility |