Quantitative Methods - Quantitative Methods Section 2

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16. If events A and B are mutually exclusive, then which of the following is true?

  • Option : C
  • Explanation : Mutually exclusive events are those events which cannot happen together, i.e. there is no intersection between the two events. Therefore, both P (A|B) and P (AB) must be equal to zero
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17. The probability of any event can be best defined as a number between:

  • Option : C
  • Explanation : The two defining properties of a probability are as follows: The probability of any event, E, is a number between 0 and 1. The sum of the probabilities of any set of mutually exclusive and exhaustive events equals one.
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18. If an analyst estimates the probability of a stock earning at least the 5- year market average return using relative frequency from historical data, then the resulting probability is best known as:

  • Option : B
  • Explanation : An empirical probability is “a probability estimated from data as a relative frequency of occurrence.”.
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19. An event is equally likely to occur in any month this year. The probability of the event occurring is best known as:

  • Option : A
  • Explanation : A probability obtained based on logical analysis is a priori probability
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