- CFA Exams
- CFA Exam: Level I 2021
- 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 raise given he gets Salesman of the Month)?

B. 50%

C. 40%

A. 16.7% to nearest 0.1%

B. 50%

C. 40%

Correct Answer: A

In a similar tree diagram, the event raise given Salesman of Month is represented by the top branch of the second set of branches. To find the probability of this branch we use: 0.6x = 0.1. Now, x = 0.1/0.6 = 1/6 = 0.1666. Thus, P(Sal gets raise given he gets Salesman of the Month) = 16.7% to nearest 0.1%.

###
**User Contributed Comments**
5

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

Guenter |
Figure does not fit to text |

fedha |
P(S) = 0.60 P(R) = 0.40 P(SR) = 0.10 P(R|S) =? Therefore 0.10 = y*0.60 Solving for y = 0.10/0.60 = 0.1667 P(R|S) = 0.1667 |

Rachelle3 |
it is easier to follow q? what is the prob of sal getting a raise now stop here we know sal getting a raise is 0.4 then it tells you given he gets salesman of month we know its 0.6 so 0.4 divided by 0.6 q? it 1st wants to know prob of raise; given tells you what to divide by |

Rachelle3 |
I made a mistake I meant salesman of month getting raise divided by salesman of month I misread it! |

Rachelle3 |
I was doing it from the other way around the 1st time I could have just added 1 but whichever work best for you! |