Bernoulli Trial
An experiment that has only two possible outcomes is called Bernoulli trial. For example, Pass or Fail, Dead or Alive, Head or Tail etc.
For simplicity these events are called success (S) or failure (F). The probability of success is thus given by
And according to the fact that total probability is 1. We have, . And thus, the probability of failure is given by
Example 1. If the probability that a patient will survive is 0.3 then what is the probability that the patient could not survive?
Solution
Here, P(S) = 0.3
So, P(F) = 1 - 0.3 = 0.7
Basic Financial terms in Corporate and Mathematical Finance |
Selection of assets, risk and return, and portfolio analysis |
View the online notes for Financial Mathematics (CT1) |
Learn Financial Computing with C++ step by step |