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) subjective probability
C) conditional probability
D) empirical classical probability

Question

Quizplus · Accepted Answer

The analyst's probability determination is based on their own subjective assessment of the available information, rather than a priori knowledge or empirical observation. Therefore, this is an example of subjective probability.

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