- 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**

Sal has a 60% probability of being Salesman of the Month. He has a 40% probability of getting a raise. Sal has a 10% probability of being Salesman of the Month and getting a raise. What is P(Sal gets Salesman of the Month given he gets the raise)?

B. 30%

C. 16.7% to nearest 0.1%

A. 25%

B. 30%

C. 16.7% to nearest 0.1%

Correct Answer: A

In a tree diagram, the event Salesman of Month given raise is represented by the top branch of the second set of branches. To find the probability of this branch we use: 0.4x = 0.1. Now, x = 0.1/0.4 = 1/4 = 0.25. Thus, P(Sal gets Salesman of the Month given raise) = 25%.

###
**User Contributed Comments**
4

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

fedha |
P(S)=0.60 P(R)=0.40 P(SR)=0.10 P(S|R)=? We know P(SR)=P(S|R)*P(R)... Therefore 0.10 = y * 0.40 solving for y=0.10/0.40 y = 0.25 ~ 25% ...P(S|R) = 0.25 |

Fotsta |
P(A/B)=P(AB)/P(B)=0,1/0,4=0,25 |

2014 |
Each event is based on the other event. Practically, applies if u are salesman of the year then only u get raise. So multiply all |

idzani |
That P(S)=60% only serves as a distraction. Didn't really need it in calculation. |