- CFA Exams
- CFA Exam: Level I 2021
- Study Session 2. Quantitative Methods (1)
- Reading 8. 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. |