Alison has all her money invested in two mutual funds, A and B. She knows that there is a 40% chance that fund A will rise in price, and a 60% chance that fund B will rise in price given that fund A rises in price. What is the probability that both fund A and fund B will rise in price?
A) 0.24
B) 0.40
C) 0.76
D) 1.00

Question

Quizplus · Accepted Answer

The probability that both fund A and B will rise in price is found by multiplying the probability of A rising by the conditional probability of B rising given A rises: $0.40 \times 0.60 = 0.24$.

Alison Has All Her Money Invested in Two Mutual Funds