Statistics, more precisely probability, seems to always give me problems. I just don’t understand why after all the hours of studying, from university and CFA studying, it just doesn’t click. Does anyone here have any websites or specific sources I can look to get another view on probabilities? I am referring to Reading 8 in the CFA books. I’ve read the material a few times and I understand the concepts and seem to be able to describe it to someone but when it comes down to solving a problem I just can’t seem to get it. Thanks!
Maybe it is not exactly what you are looking for, but I can recommend the forum talkstats.com if you need a solution to any problem in statistics.
my advice. forget all the crazy looking formulas and theorems. learn to draw prob trees and this becomes so easy you’ll laugh. This thing drove me nuts last year, I even went out and bought one of those probability for dummies books, nothing clicked but once i learned the tree route it was easy.
@rising yellow I could not believe it when I read your post. I could have written it myself. Am in the exact same position - and I too have years of studying for school, university and accountancy exams but am struggling with probability for the CFA L1 - especially while solving problems. I am actually reading a - for dummies like book called Statistics demystified by a chap called Giblisco Stan. Signs are encouraging, ill keep you posted on the progress.
The trees route is even more complicated. use A cartesian Diagram. I’m working on a cheat sheet, email me here worldnews3@hotmail.com and let you have once i’m done.
Thank you for all the replies. @jut111 - I understand the whole tree probability thing and I have gone through many different Youtube videos and also different examples/questions after searching for them with Google. All the “dice and flipping a coin” probabilities are very easy using a tree diagram. The only problem is applying the tree diagram to the CFA L1 questions. I just can’t seem to do it. Maybe I am missing something. Does anyone know if you can apply the tree diagram to CFA Book 1, Reading 8, Questions 5,6,7,8? I used the tree diagram for Question 11 and it was super easy. @souveran - Always nice to know someone else is going through the same issues. Please keep me updated. Good Luck! @ANS - Thanks for the reply, just took a quick look on Google about the Cartesian Diagram and it made me even more list. I will email you and we will talk. I hope this avenue will lead me to the solution to my probability woes.
If you happen to use the 2009 Schweser notes for that section, it uses tree diagrams to solve a whole bunch of the questions. Contrary to some previous posts I’ve just found it easier overall to memorize most of the other formulas. They’re all very similar and all it comes down to is determining which one to use given a specific set of data. Even using the tree diagrams, though, I still struggle once in a while with Bayes problems…
@ Rising yellow & souveran - guys you have one more person in the same boat… from the time i got the schweser material in Jan until mid-Feb i wasted presious time in understanding probability… when i used to read the lecture note it used to sound fine, but when i went go to solve problems i drew blank… finally i decided that even if i skip “probability” what is its impact on my results (keeping in mind that someone scoring >70% has never failed in CFA exams, i.e. i can get 72 wrongs but still pass). I have decided that it does not make sense wasting too much time on a single topic at the cost of other areas which I might be able to absorb better and answer maybe with >75% accuracy. So i have started with other topics and as time permits i will revisit prob…
I am struggling with some probability questions too, particularly Bayes problems. I found out that even Bayes problems can be well structured using trees. Just find the conditions probability, note this on the first branches and then compute the remaining events probability for the leaves, including the complements. Now you can enumerate all probabilities and it should become clear which one you need for the question being asked. This approach worked for me, YMMV.