- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 8. Probability Concepts
- Subject 4. Multiplication Rule for Independent Events

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**CFA Practice Question**

Suppose that the probability of A is 0.80 and the probability of B is 0.60. If A and B are independent events, what is the probability of A or B?

A. 0.48

B. 0.80

C. 0.92

**Explanation:**Since A and B are independent events, P(A) = P(A|B) = 0.8 and P(AB) = P(A|B)P(B) = 0.80 x 0.60 = 0.48, so P(A or B) = P(A) + P(B) - P(AB) = 0.80+0.60-0.48=0.92.

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**User Contributed Comments**
3

User |
Comment |
---|---|

examcfa |
P(A or B) = P(A)+ P(B) - P(A*B) , independent |

mc25456 |
A and B are independent events, so P(A)=P(A|B)=0.8 and P(B)=P(B|A)=0.6 |

weiwei |
Fot this one, P(A)=0.8 then P(A or B) > 0.8 |