CFA Level 1: Mutually Exclusive Events

Special Rule of Addition

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Question

If two events A and B are mutually exclusive, what does the special rule of addition state?

Answers

Explanations

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A. B. C. D. E.

Explanation

The key word is that these events are mutually exclusive. So P(A or B) = P(A) + P(B). The probabilities stand alone.

The special rule of addition applies to mutually exclusive events, which are events that cannot occur simultaneously. In this case, if events A and B are mutually exclusive, it means that if event A occurs, event B cannot occur, and vice versa.

The special rule of addition states that the probability of either event A or event B occurring is equal to the sum of their individual probabilities. Mathematically, it can be expressed as:

P(A or B) = P(A) + P(B)

Option E correctly represents this rule. The notation "P(A or B)" means the probability of either event A or event B occurring. By adding the individual probabilities of A and B, we obtain the probability of either event happening.

Options A and B are incorrect because they include the term "and/or," which is not accurate. The "or" in the formula represents the union of events, not both events occurring simultaneously.

Option C states that none of the answers provided are correct, which is not accurate because option E is correct.

Option D is incorrect because it subtracts the probability of event B from the probability of event A, which is not a valid calculation for the probability of either event A or event B occurring.

Therefore, the correct answer is E. P(A or B) = P(A) + P(B).