Linear belief function

Linear Belief Function is an approach to evaluate portfolio performance.

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THE CONCEPT OF LINEAR BELIEF FUNCTIONS

The Dempster-Shafer theory of belief functions provides a flexible tool for knowledge representation and a rigorous mechanism for knowledge integration. Linear belief functions (LBF) extend the theory to the case when variables of interest are continuous. Examples of such variables include financial asset prices, portfolio performance, and other antecedent and consequent variables. In particular, a LBF can represent both logical and probabilistic knowledge for three types of variables: deterministic such as observables, ran¬dom whose distribution is normal, and vacuous on which no knowledge bears. Logical knowledge is represented by linear equations. Probabilistic knowledge is represented by normal distributions.