# 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.

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

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

@ RobertA: Answer A is correct, because here, two events happen at the same time. With answer C, something happens if (!) another event occurs. Answer B. is an unconditional probability. So keep in mind the word “and” for joint probabilities “AB”, and the word “if” for conditional probabilities. Daniel www.lambert-shop.net

narayanan87 Wrote: ------------------------------------------------------- > 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.