The primary challenge to the financial analyst is to determine how to proceed in the face of uncertainty. Uncertainty arises from imperfect knowledge and from incomplete data. Methods for interpreting limited information may thus help analysts measure and control uncertainty. Long ago, natural scientists noticed the widespread presence of random variation in nature. This led to the development of laws of probability, which help predict outcomes. As it turns out, many of the laws that seem to explain the behavior of random variables in nature apply as well to the behavior of financial variables such as corporate earnings, interest rates, and asset prices and returns.