using Bayes formula in Quants methods

Hello all,

I was looking at the example on using Bayes formula on the Schweser Guide, Book 1, page no 223.

According to the example P (O | I ) = P(IO) / P(I)

Shouldn’t it be P (O | I ) = P(OI) / P(I) ? Or it doesnt make a difference?

I would really appreciate if someone can explain this for me.

Thanks in advance :slight_smile:

P(A & B) = P(B & A)

It makes no difference; they’re the same.

I wrote an article on Bayes’ formula that may be useful:

The Bayes formula is

P (O | I ) = P(I | O)* P(O) / P(I) = P(OI) / P(I)

I would recommend using a tree diagram with these problems and not focus too much on the formula.

Once I did this…these problems were actually very easy.

I agree: see my article, cited three posts above.