- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 3. Probability Concepts
- Subject 3. Addition Rule for Probabilities: the Probability that at Least One of Two Events Will Occur
CFA Practice Question
Suppose that A and B are independent events. The probability of A is 0.6 and the probability of B is 0.8. What is the probability either A or B will occur?
B. 0.48
C. 0.92
A. 0.14
B. 0.48
C. 0.92
Correct Answer: C
where PA = probability of event A
and PB = probability of event B
If A and B are independent events, then the probability of both events occurring is the product of the probability of A times the probability of B. So, Pboth = .60 x .80 = .48.
The probability of either event occurring is given by the formula: Peither = PA + PB - Pboth
where PA = probability of event A
and PB = probability of event B
Therefore, the probability of either event occurring is: Peither = .60 + .80 - .48 = .92
User Contributed Comments 9
User | Comment |
---|---|
dipta | P(not A)= .4 * P(not B) = .2 == .08. Therefore P(A or B) = 1 - P(not A and not B) = .92 |
Gina | or p(A)+p(B)-p(AandB) 0.6+0.8-(0.6*0.8)=0.92 |
aakash1108 | @dipta - good view. complement. |
rethan | What is the difference between independent and mutually exclusive? |
ilgibe | Indipendent: P(spades) and P(ace) mutually exclusive: P(6) or P(5) rolling a dice |
2014 | Either is used so, (add ) multiply and minus |
johntan1979 | Independent: P(AB) = P(A|B) x P(B) = P(A) x P(B) Mutually exclusive: P(AB) = 0 |
cfastudypl | Gina, on spot and it is the quickest way to answer the question, well done. |
choas69 | @johntan correction: independent then P(AB)=P(A)*P(B) dependent then P(AB)= P(A)*P(B/A) or P(B)*P(A/B) thats what he meant to write. |