The sum of the probabilities of all outcomes is 1. Independent events are those not affected by a previous event. The probability of two independent events both happening is 𝑃(A and B) = 𝑃(A) × 𝑃(B ...
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...
For any event that has multiple outcomes with different probabilities, it can be helpful and illustrative to construct a chart or diagram of the possible outcomes. Tree diagrams are a useful example ...
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