- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 8. Probability Concepts
- Subject 2. Unconditional, Conditional, and Joint Probabilities

###
**CFA Practice Question**

Suppose that the probability that Company AirCo gets a government contract to produce military jets is 0.65 and the probability that AirCo lays off 5,000 employees if they don't get the contract is 0.80. What is the probability that AirCo does not get the government contract and lays off 5,000 employees?

A. 0.280

B. 0.438

C. 0.520

**Explanation:**Let A denote the event that AirCo does not get the government contract and B denote the event that 5,000 AirCo employees are laid off. The probability of A is P(A) = 1 - 0.65 = 0.35 and the probability of B given A is P(B|A) = 0.8. The probability of A and B is P(AB) = P(B|A) P(A) = 0.80 x 0.35 = 0.28.

###
**User Contributed Comments**
0

You need to log in first to add your comment.