DEFINITION of 'Prior Probability'
The probability that an event will reflect established beliefs about the event before the arrival of new evidence or information. Prior probabilities are the original probabilities of an outcome, which be will updated with new information to create posterior probabilities.
BREAKING DOWN 'Prior Probability'
Prior probabilities represent what we originally believed before new evidence is uncovered. New information is used to produce updated probabilities and is a more accurate measure of a potential outcome. For example, three acres of land have the labels A, B and C. One acre has reserves of oil below its surface, while the other two do not. The probability of oil being on acre C is one third, or 0.333. A drilling test is conducted on acre B, and the results indicate that no oil is present at the location. Since acres A and C are the only candidates for oil reserves, the prior probability of 0.333 becomes 0.5, as each acre has one out of two chances.

Posterior Probability
The revised probability of an event occurring after taking into ... 
Gross Acres
The amount of leased real estate, that a petroleum and/or natural ... 
Net Acres
The amount of leased real estate that a petroleum and/or natural ... 
Accelerated Cost Recovery System ...
A system of depreciation introduced by the Economic Recovery ... 
Recovery Property
A specific class of depreciable real estate. Recovery property ... 
Unconditional Probability
The probability that an event will occur, not contingent on any ...

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
Estimating with Subjective Probability
Subjective probability is someoneâ€™s estimation that an event will occur. 
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. 
Trading
Multivariate Models: The Monte Carlo Analysis
This decisionmaking tool integrates the idea that every decision has an impact on overall risk. 
Investing
Understand The Math Behind Betting Odds & Gambling
A betting opportunity should be considered valuable if the probability assessed for an outcome is higher than the implied probability estimated by the bookmaker. Furthermore, the odds on display ... 
Markets
Oil Boom 2.0: Be Sure You Are Ready to Invest
Learn about the potential for oil boom 2.0, and discover why some experts say this is a good time to invest in oil companies and ETFs. 
Markets
Effect of Fed Fund Rate Hikes on Oil
Find out how oil markets might react to an interest rate hike by the Federal Reserve, and why consumers and bondholders could love a rising interest rate. 
Trading
How Does Crude Oil Affect Gas Prices?
Find out how this commodity's fluctuating price affects more than just how much you pay at the pump. 
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.

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 >> 
Why do oil stock prices drop?
Doesn't lower oil prices mean more profit for companies that use oil products? ... Read Answer >> 
When you buy oil, do you have to buy thousands of stocks at one time or can you start ...
I am new to oil stocks and want to invest a couple thousand dollars. Do oil stocks pay dividends? Is now the time to ... Read Answer >> 
How does an oil and gas company measure and state their reserves?
Understand how oil and gas companies estimate possible reserves and how different classifications are used to designate the ... Read Answer >> 
A relative left myself and 6 other family members about 70 acres. If we sell right ...
The property evaluates at $200,000. If there are any costs involved, about how much would they b... Read Answer >> 
What is the difference between proven and probable reserves in the oil and gas sector?
Learn how those in the oil and gas sector classify oil reserves and the specific differences between proven and probable ... Read Answer >>