Chance News 100: Difference between revisions

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==Forsooth==
==Forsooth==
One sentence too many?<br>
<i>One sentence too many?</i><br>


“At issue was how highly correlated the prices of various subprime mortgage bonds inside a CDO might be.  Possible answers ranged from 0 percent (their prices had nothing to do with each other) to 100 percent (their prices moved in lockstep with each other).  Moody’s and Standard & Poor’s judged the pools of triple-B-rated bonds to have a correlation of around 30 percent, which did not mean anything like what it sounds.  It does not mean, for example, that if one goes bad, there is a 30 percent chance that the others will go bad too.  It means that if one bond goes bad, the others experience very little decline at all.”
“At issue was how highly correlated the prices of various subprime mortgage bonds inside a CDO might be.  Possible answers ranged from 0 percent (their prices had nothing to do with each other) to 100 percent (their prices moved in lockstep with each other).  Moody’s and Standard & Poor’s judged the pools of triple-B-rated bonds to have a correlation of around 30 percent, which did not mean anything like what it sounds.  It does not mean, for example, that if one goes bad, there is a 30 percent chance that the others will go bad too.  It means that if one bond goes bad, the others experience very little decline at all.”

Revision as of 13:33, 14 July 2014

Quotations

"Steve Ziliak, a critic of RCTs [randomised controlled trials], complains about one conducted in China in which some visually-impaired children were given glasses while others received nothing. The case against the trial is that we no more need a randomised trial of spectacles than we need a randomised trial of the parachute."

--Tim Harford, in: The random risks of randomized trials, Financial Times, 25 April 2014

Submitted by Paul Alper

Forsooth

One sentence too many?

“At issue was how highly correlated the prices of various subprime mortgage bonds inside a CDO might be. Possible answers ranged from 0 percent (their prices had nothing to do with each other) to 100 percent (their prices moved in lockstep with each other). Moody’s and Standard & Poor’s judged the pools of triple-B-rated bonds to have a correlation of around 30 percent, which did not mean anything like what it sounds. It does not mean, for example, that if one goes bad, there is a 30 percent chance that the others will go bad too. It means that if one bond goes bad, the others experience very little decline at all.”

Michael Lewis, Boomerang, 2011, pp. 207-208

Submitted by Margaret Cibes

Item 1

Item 2