# Bayes' Theorem

- A formula for determining conditional probability named after 18th-century British mathematician Thomas Bayes. The theorem provides a way to revise existing predictions or theories given new or additional evidence. In finance, Bayes’ Theorem can be used to rate the risk of lending money to potential borrowers.

The formula is as follows:

Also called "Bayes’ Rule."

Applications of the theorem are widespread and not limited to the financial realm. As an example, Bayes’ Theorem can be used to determine the accuracy of medical test results by taking into consideration how likely any given person is to have a disease and the general accuracy of the test.

*Investment dictionary.
Academic.
2012.*

### Look at other dictionaries:

**Bayes' theorem**— In probability theory, Bayes theorem (often called Bayes law after Thomas Bayes) relates the conditional and marginal probabilities of two random events. It is often used to compute posterior probabilities given observations. For example, a… … Wikipedia**Bayes theorem**— A probability principle set forth by the English mathematician Thomas Bayes (1702 1761). Bayes theorem is of value in medical decision making and some of the biomedical sciences. Bayes theorem is employed in clinical epidemiology to determine the … Medical dictionary**Bayes-Theorem**— Das Bayestheorem (auch Satz von Bayes) ist ein Ergebnis der Wahrscheinlichkeitstheorie, benannt nach dem Mathematiker Thomas Bayes. Es gibt an, wie man mit bedingten Wahrscheinlichkeiten rechnet. Inhaltsverzeichnis 1 Formel 2 Interpretation 3… … Deutsch Wikipedia**Bayes Theorem**— Das Bayestheorem (auch Satz von Bayes) ist ein Ergebnis der Wahrscheinlichkeitstheorie, benannt nach dem Mathematiker Thomas Bayes. Es gibt an, wie man mit bedingten Wahrscheinlichkeiten rechnet. Inhaltsverzeichnis 1 Formel 2 Interpretation 3… … Deutsch Wikipedia**Bayes' theorem**— /beɪz ˈθɪərəm/ (say bayz thearruhm) noun Statistics a method of measuring the degree of belief that can be attached to a proposition, based on the relevance of ascertainable facts. Also, Bayes law. {named posthumously after Thomas Bayes, 1701–61 … Australian English dictionary**Bayes' theorem**— noun Etymology: Thomas Bayes died 1761 English mathematician Date: 1865 a theorem about conditional probabilities: the probability that an event A occurs given that another event B has already occurred is equal to the probability that the event B … New Collegiate Dictionary**Bayes' theorem**— noun Statistics a theorem expressing the conditional probability of each of a set of possible causes for a given observed outcome in terms of the known probability of each cause and the conditional probability of the outcome of each cause.… … English new terms dictionary**Bayes' theorem**— noun (statistics) a theorem describing how the conditional probability of a set of possible causes for a given observed event can be computed from knowledge of the probability of each cause and the conditional probability of the outcome of each… … Useful english dictionary**Bayes' theorem**— /bayz, bay ziz/, Statistics. a theorem describing how the conditional probability of each of a set of possible causes, given an observed outcome, can be computed from knowledge of the probability of each cause and of the conditional probability… … Universalium**Bayes’ theorem**— Stats a probability theorem that allows statisticians continually to revise the probability of an event according to new evidence … The ultimate business dictionary