Probability and Statistics

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1. Probability is measured
between 0 and 1
2. Probability =
• # of Ways A could happen
• Total # of Outcomes
• It is the likelihood of an event, not a certainty
• Past outcomes do not influence future outcomes
• There is no such thing as an event being "due"
4. Discrete Probability Distributions have how many possible outcomes?
a limited, distinct number
5. Coefficient of Variation
• Standard Deviation
• Expected Value
6. Cumulative Distributions (CDFs)
Probability that the outcome is Less Than or Equal to some value for all possible values
7. EP=
1-CDF
8. 2 Types of Exceedance Probability Curves:
• Occurrence - largest loss within a year
• Aggregate - sum of all losses within a year
9. 2 Ways to express Probabilities:
• Return Periods, or
• Exceedance Probabilities (EP)

They are the same thing.  We prefer EPs.  A 1% probability correlates to a 100 year return period. (1 in 100 chance, or 1%)
10. Tail Value at Risk (TVAR)
%TVAR is the average loss of all years with having an EP<p.

.1% TVAR is the expected losses given the EP<.1%.
11. Numerical Convolution
Combines the probability distributions of two events into a single probability distribution that represents the sum of the two events.

Touchstone uses this to combine loss distributions.
 Author: emontgomery ID: 268195 Card Set: Probability and Statistics Updated: 2014-03-27 20:21:30 Tags: statistics Probability Folders: Description: Cat School Prob & Stats Show Answers: