CFA Practice Question

There are 410 practice questions for this study session.

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.

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