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 classical probability
B) Empirical classical probability
C) Subjective probability
D) Conditional probability

Question

Quizplus · Accepted Answer

The analyst's determination of the probability is based on their subjective judgment, making this an example of subjective probability. A priori classical probability and empirical classical probability involve using mathematical calculations or historical data to determine probabilities, neither of which is evident in this scenario. Conditional probability would involve considering the probability of one event given that another event has already occurred.

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