DEFINITION of 'Addition Rule For Probabilities'
A statistical property that states the probability of one and/or two events occurring at the same time is equal to the probability of the first event occurring, plus the probability of the second event occurring, minus the probability that both events occur at the same time.
Mathematically, this property is denoted by:
INVESTOPEDIA EXPLAINS 'Addition Rule For Probabilities'
For example, assume we wish to determine the probability of drawing a king and/or a queen out of a deck of cards on only one draw. Using the addition rule for probabilities, we get the following: P(King) = 4/52, P(Queen) = 4/52, and P(King and Queen) = 0.
Since it is impossible to draw both a king and queen on the same draw, we can conclude that the probability of drawing either a king or queen from a deck of cards is 8/52, or about 15.4%.

Probability Distribution
A statistical function that describes all the possible values ... 
Normal Distribution
A probability distribution that plots all of its values in a ... 
Dispersion
A statistical term describing the size of the range of values ... 
Binomial Distribution
A probability distribution that summarizes the likelihood that ... 
A Priori Probability
Probability calculated by logically examining existing information. ... 
Premium to Surplus Ratio
Net premiums written divided by policyholders’ surplus. The premium ...

Investing Basics
What Are The Odds Of Scoring A Winning Trade?
Just because you're on a winning streak doesn't mean you're a skilled trader. Find out why. 
Fundamental Analysis
Find The Right Fit With Probability Distributions
Discover a few of the most popular probability distributions and how to calculate them. 
Active Trading Fundamentals
Bet Smarter With The Monte Carlo Simulation
This technique can reduce uncertainty in estimating future outcomes. 
Options & Futures
An Introduction To Value at Risk (VAR)
Volatility is not the only way to measure risk. Learn about the "new science of risk management". 
Fundamental Analysis
What are the most common issues with Serial Correlation in stocks?
Read about the concept of serial correlation in stock returns, and learn why market analysts are divided about the efficacy of trading based on stock patterns. 
Bonds & Fixed Income
How do I calculate yield to maturity of a zero coupon bond?
Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than a bond with a coupon. 
Trading Strategies
How far back in a stock's history should you go when gauging its volatility?
Discover why it can be difficult for investors to figure out how far back to go into a stock's history when gauging its volatility. 
Fundamental Analysis
What does the term 'invisible hand' refer to in the economy?
Discover and understand the concept of the "invisible hand" as explained by Adam Smith, considered the founder of modern economic theory. 
Fundamental Analysis
At what level is the current account deficit considered excessive, in terms of percent?
Take a deeper look at the variables that impact current account deficits, and learn why not all types of deficits have equal impacts on a nation's economy. 
Trading Strategies
What are common examples of Serial Correlation in finance?
Take a deeper look at serial correlation in finance, and find out why most attempts at discovering serial correlation among asset prices have failed.