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Bayes theorem Meaning

Bayes’ theorem is a fundamental result in probability theory that describes how to update the probability of an event based on new evidence. In its simplest form, it states that the probability of a hypothesis H given observed data D is proportional to the likelihood of D given H multiplied by the prior probability of H. Mathematically, P(H|D) = [P(D|H) × P(H)] / P(D).

This formula allows us to reverse conditional probabilities: rather than asking how likely the evidence is if the hypothesis is true, we ask how likely the hypothesis is after observing the evidence. Developed by Thomas Bayes and later formalized by Pierre‑Simon Laplace, the theorem underpins Bayesian inference—a statistical framework in which prior beliefs are updated with data to form posterior beliefs.

Bayes’ theorem has applications across science and engineering, from medical diagnosis and spam filtering to machine learning and risk assessment. It provides a coherent way to incorporate prior knowledge and quantify uncertainty, but the choice of priors and computational complexity can be challenging in high‑dimensional problems.

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Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

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