Select the Correct Statement Concerning the Law of Total Probability

question 8

Multiple Choice

Select the correct statement concerning the Law of Total Probability and conditional probability.

• A) The Law of Total Probability defines unconditional probability of an event P(E) using known conditional probabilities P(E|Bk) given that mutually exclusive events Bk have occurred, each Bk with a known probability itself. Conditional probability P(E|F) defines the probability of an event E given that an event F has occurred.
• B) The Law of Total Probability defines unconditional probability of an event P(E) using known conditional probabilities P(E|Bk) given that mutually exclusive events Bk have occurred, each Bk with a known probability itself. Conditional probability P(E|F) defines the probability of an event F given that an event E has occurred.

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Definitions:

Pretax Return

The income or profit that a company generates before any taxes have been applied.

Discount Factor(s)

A mathematical factor used to calculate the present value of a future amount of money or stream of cash flows.

Intangible Benefits

Advantages or gains from a project or investment that are not directly quantifiable in monetary terms, such as improved customer satisfaction or brand reputation.

Automated Equipment

Machinery that operates with minimal human intervention, often used to increase efficiency and productivity in manufacturing.