# Joint Probability of Two Events

Joint probability refers to the multiplication rule of probability. This is the probability that both the events will occur.

**Example**

The probability that the price of oil will rise, P(B) = 0.5

The probability that the bus fare will increase if oil price rises, P(A|B) = 0.4

The probability that both oil prices and bus fares will rise, P(AB) = 0.4*0.5 = 0.2

This may look complex but the logic is actually quite straight forward. There is a 50% chance that oil price will rise and if it rises there is a 40% chance that the bus fair will also rise. So, the joint probability of both oil price rise and bus fare rise is 50% of 40%, i.e., 0.5*0.4 = 0.20 or 20%.

LESSONS

- Probability - Basic Terminology
- Two Defining Properties of Probability
- Empirical, Subjective and Priori Probability
- State the Probability of an Event as Odds
- Unconditional and Conditional Probabilities
- Multiplication, Addition and Total Probability Rules
- Joint Probability of Two Events
- Probability of Atleast One of the Events Occuring
- Dependent Vs. Independent Events in Probability
- Joint Probability of a Number of Independent Events
- Unconditional Probability Using Total Probability Rule
- Expected Value of Investments
- Calculating Variance and Standard Deviation of Stock Returns
- Conditional Expected Values
- Calculating Covariance and Correlation
- Expected Value of a Portfolio
- Variance and Standard Deviation of a Portfolio
- Bayes’ Theorem
- Multiplication Rule of Counting
- Permutation and Combination Formula

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