Quantitative Methods - Quantitative Methods Section 2
- Option : C
- Explanation : According to the multiplication rule of probabilities, the joint probability of A and B can be expressed as: P(AB) = P(A|B) * P(B) It is given that A and B are independent events and hence P(A|B) = P(A). P(AB) = P(A) * P(B).
- Option : A
- Explanation : The probability that at least one of the bonds will be called can be calculated using the Addition rule of probability which is: P(A or B) = P(A) + P(B) – P(A and B) where P(A and B) is P(A) * P(B) P(A or B) = 0.6 + 0.5 - 0.6 * 0.5 = 0.8.
- Option : B
- Explanation : Whenever or is used, use the addition rule for probabilities to calculate the probability of either of the events occurring or that both will occur: P(A or B) = P(A) + P(B) – P(AB) P(A or B) = 0.6 + 0.2 – 0.15 = 0.65.
- Option : A
- Explanation : The joint probability can be computed using the multiplication rule: P (AB) = P(A B) P(B) where P(A B) is the conditional probability of A given that B has occurred. If, A refers to the probability that that GE stock will appreciate and B refers to the probability that the economic growth will be above average, then the joint probability is: 0.60 * 0.35 = 0.21.
- Option : A
- Explanation : The probability that at least one of two events will occur is the sum of the probabilities of the separate events less the joint probability of the two events. P(A or B) = P(A) + P(B) – P(AB) 80% = 70% + 20% – P(AB); therefore, P(AB) = 10%.
