The closing price of a company's stock tomorrow can be lower, higher or the same as today's closing price. After evaluating all the information available on the company's fundamentals and the economic environment, an analyst has determined that the probability that tomorrow's closing price will be higher than today's is determined to be 25%. This is an example of using which of the following probability approach?
A) a priori probability
B) empirical probability
C) subjective probability
D) conditional probability

Question

Quizplus · Accepted Answer

This is an example of subjective probability, as the analyst has used their expertise and knowledge to determine the likelihood of a higher closing price. A priori probability would be based on theoretical calculations, empirical probability would be based on historical data, and conditional probability would involve a specific condition or event influencing the outcome.

The Closing Price of a Company's Stock Tomorrow Can Be