Hi, Can anyone please help to understand the below question?
Q: A company says that whether it increases its dividends depends on whether its earnings increase. From this we know:
A) P(earnings increase | dividend increase) is not equal to P(earnings increase).
B) P(both dividend increase and earnings increase) = P(dividend increase).
C) P(dividend increase | earnings increase) is not equal to P(earnings increase).
The correct answer is “A” but as per my understanding, “C” should be the answer. The conditional probability of A given that B has occurred. In the above question, the increase of dividend depends on earning increase hence dividend is “A” and earnings “B”. Where am I going wrong here in my logic?
Thanks very much.