Groundlearn / Glossary / Bayes’ formula
Bayes’ formula
Also called Bayesian updating, Bayes theorem. A CFA term, defined in plain English with the distinction examiners test.
What it means
A rule for revising the probability of an event in the light of new information, using how likely that information is if the event is or is not true.
The exam angle
The usual exam trap is forgetting the false positives in P(B): a screen that flags most good managers also flags some bad ones.
Where it appears in the syllabus
- Quantitative MethodsCFA Level I · exam weight 11–14% · Returns and benchmarks, time value, distributions, portfolio maths, regression.
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Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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