Which Rule States That When Two Outcomes Are Mutually Exclusive,the

question 21

Multiple Choice

Which rule states that when two outcomes are mutually exclusive,the probability that either one of these outcomes will occur is the sum of their individual probabilities?

• A)additive rule
• B)multiplicative rule
• C)both A and B
• D)none of the above

---

Definitions:

Volatility

Volatility refers to the rate at which the price of a security increases or decreases for a given set of returns, indicating the risk or uncertainty of changes in value.

Interest Rate Swap

A financial derivative instrument in which two parties exchange interest rate payments on specified principal amounts over a certain period.

Inverse Floaters

A type of bond or other debt instrument whose coupon rate has an inverse relationship to short-term interest rates, thus fluctuating oppositely to market rates.

Short Hedge

A risk management strategy used to protect against the decline in the price of a commodity or asset, involving the sale of futures contracts or other derivatives.