DEFINITION of 'Objective Probability'
The probability that an event will occur based an analysis in which each measure is based on a recorded observation, rather than a subjective estimate. Objective probabilities are a more accurate way to determine probabilities than observations based on subjective measures, such as personal estimates.
Next Up
BREAKING DOWN 'Objective Probability'
For example, one could determine the objective probability that a coin will land "heads" up by flipping it 100 times and recording each observation. When performing any statistical analysis, it is important for each observation to be an independent event that has not been subject to manipulation. The less biased each observation is, the less biased the end probability will be.
RELATED TERMS

Subjective Probability
A probability derived from an individual's personal judgment ... 
Joint Probability
A statistical measure where the likelihood of two events occurring ... 
Quartile
A statistical term describing a division of observations into ... 
Compound Probability
A mathematical term relating to the likeliness of two independent ... 
Addition Rule For Probabilities
A statistical property that states the probability of one and/or ... 
Prior Probability
The probability that an event will reflect established beliefs ...
Related Articles

Investing
Estimating with Subjective Probability
Subjective probability is someoneâ€™s estimation that an event will occur. 
Trading
Financial Forecasting: The Bayesian Method
This method can help refine probability estimates using an intuitive process. 
Investing
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worstcase scenario. 
Investing
Explaining Expected Return
The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. 
Investing
Understanding Management by Objectives
Management by objectives is a process in which a manager and an employee agree on specific performance goals and then develop a plan to reach those goals. 
Personal Finance
Assessing Bank Assets: Are Your Savings Safe?
Learn how to determine if your assets are safe or if your bank has spread itself too thin. 
Markets
What Are the Federal Reserve's Bank Holidays?
Obtain a complete rundown of the federal holidays that are observed by the Federal Reserve Bank and learn how they affect the financial markets overall. 
Managing Wealth
Asset Manager Ethics: Independence and Objectivity
The best practices in maintaining independence and objectivity should be adopted by firms to protect investment professionals from pressure both from within and outside the firm. 
Investing
What Are The Odds Of Scoring A Winning Trade?
Just because you're on a winning streak doesn't mean you're a skilled trader. Find out why. 
Investing
A Guide For Understanding Information Cascades
We explain how information cascades work, how they relate to finance, and why they are important.
RELATED FAQS

You observe the following exchange rates in the following markets ...
Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >> 
I heard that if the price of oil is low that means the stock market is not doing ...
... Read Answer >> 
What is the difference between work in progress and work in process?
Learn how financial institutions can use Bayesian analysis to model credit default risk, and understand how derivatives have ... Read Answer >> 
What asset allocation should I use for my retirement portfolio?
Learn the basics of planning an asset allocation strategy for retirement using risk constraints and return objectives to ... Read Answer >> 
What happens if a company's earnings fall short of estimates?
Understand what it means when a company "misses earnings" and does not live up to consensus estimates, and learn why most ... Read Answer >> 
Who determines interest rates?
In countries using a centralized banking model, interest rates are determined by the central bank. In the first step of interest ... Read Answer >>