36. Which of the following statements about dependent and independent events is most likely true?

- A
P(A)P(B) is used to determine the joint probability of the two events, A and B, whether they are dependent or independent.

- B
P(A)P(B) is used to determine the joint probability of the two events, A and B, that are independent.

- C
The two events are independent if the occurrence of one event is related to the occurrence of the other.

- Option : B
- Explanation : The multiplication rule is applied only when the two events A and B are independent.

- Option : A
- Explanation : The total probability rule is used to determine the unconditional probability, given conditional probabilities.

40. Conditional expectation is least likely used in investments to determine which of the following?

- Option : B
- Explanation : With Option A we are considering the expected value of EPS if interest rates increase. This requires the use of conditional probability. Option C has the term „different scenarios‟ which implies the use of conditional probabilities.

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