Objective Probability

AAA

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.

INVESTOPEDIA EXPLAINS '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
  1. Uniform Distribution

    In statistics, a type of probability distribution in which all ...
  2. Posterior Probability

    The revised probability of an event occurring after taking into ...
  3. Actuarial Consultant

    A professional who advises clients on which methods, processes, ...
  4. A Priori Probability

    Probability calculated by logically examining existing information. ...
  5. Default Probability

    The degree of likelihood that the borrower of a loan or debt ...
  6. Probability Distribution

    A statistical function that describes all the possible values ...
Related Articles
  1. Using Historical Volatility To Gauge ...
    Markets

    Using Historical Volatility To Gauge ...

  2. Find The Right Fit With Probability ...
    Fundamental Analysis

    Find The Right Fit With Probability ...

  3. Using Normal Distribution Formula To ...
    Investing Basics

    Using Normal Distribution Formula To ...

  4. Can Investors Trust Official Statistics?
    Economics

    Can Investors Trust Official Statistics?

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center