# Dependent and independent events

CFA level I / Quantitative Methods: Basic Concepts / Probability Concepts / Dependent and independent events

The dependent events are those events where the probability of occurrence of one event depends on the occurrence of the other event.

The independent events are those events where the occurrence of one event has no impact on the occurrence of the other event.

If the joint probability of two events is equal to the multiplication of their respective unconditional probabilities, then the two events are said to be independent events. Or if the conditional probability of an event with other event is equal to its unconditional probability then the two events are said to be independent events.

The addition rule for independent events is given by the below formula:

P(A or B) = P(A) + P(B) - P(AB) = P(A) + P(B) - P(A)*P(B) [For independent events A and B]

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