CFA Practice Question

There are 410 practice questions for this study session.

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?

A. 0.14
B. 0.48
C. 0.92
Correct Answer: C

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.
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