subject: Calculating Probability in Business Success [print this page] Calculating Probability in Business Success
When we say that one event is more probable than another, we mean it's more likely to happen. The branch of mathematics called probability tries to express in numbers statements of the form: An event (A) is more or less probable than an event (B).If a person tosses up a coin, there are only two ways it can possibly fall -- heads or tails. It's as likely to fall one way as the other, so we say that the probability of falling heads is or half as probable. But, in tossing three coins, they're eight possibilities. These are: hhh, hht, hth, htt, thh, tht, tth and ttt. Only three of these these combinations have two heads, so the probability of throwing two heads is 3/8 or three eights.Wikipedia: Probability is a way of expressing knowledge or belief that an event will occur or has occurred. The concept has an exact mathematical meaning in theory, which is used extensively in such areas of study as mathematics, statistics, finance, gambling, science, artificial intelligence/machine learning and philosophy to draw conclusions.Now suppose a person throws two dice. There are thirty-six different combinations. But there's only one combination that'll give two "ones" so the probability of throwing two "ones" is 1/36th or one thirty-sixth. There's two ways to throw a "one" and a "two" so the probability of this throw is 2/36 or two thirty-sixth or you can call it 1/18th or one eighteen.There's a mathematical statement for all situations of this kind. Let (M) stand for any number of events that are equally likely to happen. Let (N) stand for the number of these events that would be favorable if they happened. Then the probability that a favorable event will happen is (N/M).These rules about probability are used by life insurance companies. When a person takes out a life insurance policy, it's important for the company to be able to estimate how long he will probability live. Each age has a different probability called life expectancy.Mathematicians have prepared tables of life expectancy. The rules of probability are also used by scientists in interpreting statistics and estimating true values from experimental data. Actually, calculating probability is widely used in all facets of business. Even in your personal life, rules of probability are used without even thinking about it.As a example when Donald Trump was asked by an interviewer, "Do you think you're a lucky real estate investor?" He says, "The harder you work the luckier you get!" Great answer, but he's also know as being paramount in calculating probability in business and real estate ventures. In other worlds more on the laws of probability and less on the luck part!
