Simple Bayesian Model in Financial Decision Making

Title

Simple Bayesian Model in Financial Decision Making

Subject

Statistics

Creator

Yuxin He

Date

2024

Contributor

Prof. Saul Jacka

Abstract

This project studies how to decide between investing in risky stocks and safe bonds using Apple Inc. (AAPL) data from 2020 to 2024. We look at two scenarios: one where we know the chances of stock prices going up and one where we don’t. When we know the chances, the best strategy is to invest about 67% in stocks. When the chances are unknown, we update our estimates with new data. Our results show that investment choices are sensitive to changes in these estimates. This research shows how using Bayesian methods can help make better investment decisions.

Meta Tags

Statistics, Bayesian Statistics, Stats, Finance, Bayesian Model, Mathematics, Decision Making, Yuxin He

Files

Citation

Yuxin He, “Simple Bayesian Model in Financial Decision Making,” URSS SHOWCASE, accessed November 7, 2024, https://urss.warwick.ac.uk/items/show/745.