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Joint Probability Question (from Schweser)

Schweser says the answer is A, but I think it's C. Isn't a joint probably a situation of "A" given "B", thus both have to occur?

Which of the following is a joint probability? The probability that a:

A)stock pays a dividend and splits next year.
B)company merges with another firm next year.
C)stock increases in value after an increase in interest rates has occurred.

Your answer: C was incorrect. The correct answer was A) stock pays a dividend and splits next year. A joint probability applies to two events that both must occur.

Yes, it can be quite confusing.

Maybe easier way to retain this is thru their symbols.

Joint Probability is: P(AB)

Probability of A given B is: P(A|B)

And relationship between the two is: P(AB) = P(A|B) * P(B)

Hope this helps.

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Keyword for joint probability is "and" while keywords for conditional are "given that", "after" etc.

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P(A|B) means B has happened, A may or may NOT happen. P(AB) means both happen

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narayanan87 Wrote:
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> P(A|B) means B has happened, A may or may NOT
> happen. P(AB) means both happen

Correction.

Probability is just the chance of something occurring, the figure by itself tells us nothing about whether the event has occurred.

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