Question

On a given day, the probability that stock A increases in price is 73%, the probability that stock B increases in price is 40%, and the chance that both stock A and stock B both increase in price is 34%. What is the probability that either stock A or stock B increases in price?

a) 79%
b) 34%
c) 73%
d) 40%

Answer 1

To find the probability that either stock A or stock B increases in price, we add the individual probabilities and subtract the probability of both stocks increasing. The probability is 79%.

Step-by-step explanation:

To find the probability that either stock A or stock B increases in price, we need to calculate the probability of each stock increasing individually and subtract the probability of both stocks increasing together.

The probability of stock A increasing is 73%, and the probability of stock B increasing is 40%. The probability of both stocks increasing together is 34%.

To find the probability of either stock A or stock B increasing, we can use the principle of inclusion-exclusion. We add the probabilities of stock A and stock B increasing, and subtract the probability of both stocks increasing:

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

Plugging in the values:

P(A or B) = 73% + 40% - 34% = 79%

Therefore, the probability that either stock A or stock B increases in price is 79%.