## What is Probability, and Why Should You Care?
Well finance people generally make money by betting on the future movement of prices. They don't predict the future. They make decisions today in face of uncertainty.
If I believe the economy will *probably* do well next year, I might invest. If I believe there’s a *good chance* a company will default, I might stay away from its bonds.
To turn these beliefs into something concrete, we need a way to think about uncertainty.
That’s where probability comes in.
Think of it like this.
Saying one event is more likely than another is useful, but not enough.
It’s like an architect saying one brick is bigger than another. True, but not enough to design a building.
Architects need geometry—length, width, height—to describe the world precisely.
Finance people need probability theory for the same reason.
It’s their geometry for uncertainty.
## And What About Statistics?
If probability is the theory, then statistics is how you apply it to real life.
You can know Pythagoras’ theorem. But to use it, you take out a ruler and measure.
It’s the same here. Probability builds the theory. Statistics uses data to test and apply it.
In short:
- Probability = the framework for uncertainty.
- Statistics = the tools to measure it in the real world.
## Why Does it Matter for Interviews?
Because most finance interview questions test probability and statistics.
Sometimes it’s brainteasers. Sometimes it’s straight theory.
But it’s almost always one of the two.