Alison has all her money invested in two mutual funds, a and

b. she knows that there is a 40% chance that fund a will rise in price. there is a 60% chance that fund b will rise in price given that fund a rises in price. there is also a 30% chance that fund b will rise in price. what is the probability that at least one of the funds will rise in price?

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Business

Scott Daniel

14 January, 15:25

Alison has all her money invested in two mutual funds, a and

b. she knows that there is a 40% chance that fund a will rise in price. there is a 60% chance that fund b will rise in price given that fund a rises in price. there is also a 30% chance that fund b will rise in price. what is the probability that at least one of the funds will rise in price?

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Layton Dodson · Answer 1

Probablity that A will raise p (A) = 40% = 0.4 Probablity that B raises with A p (A|B) = 60% = 0.6 Probablity that B will raise p (B) = 30% = 0.3 Probablity that both a and b raises P (A and B) = p (A) x p (A|B) 0.4 x 0.6 = 0.24 Probability that at least one of funds will rise p (a or b) = p (A) + p (B) - P (A and B) = 0.4 + 0.3 - 0.24 = 0.7 - 0.24 = 0.46 Probability that at least one of funds will rise = 0.46