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%.

Normal Distribution
A probability distribution that plots all of its values in a ... 
Probability Distribution
A statistical function that describes all the possible values ... 
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. ... 
Sharpe Ratio
A ratio developed by Nobel laureate William F. Sharpe to measure ...

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 is a Null Hypothesis?
In statistics, a null hypothesis is assumed true until proven otherwise. 
Investing
How to Use Stratified Random Sampling
Stratified random sampling is a technique best used with a sample population easily broken into distinct subgroups. Samples are then taken from each subgroup based on the ratio of the subgroup’s ... 
Economics
How A Limited Government Affects A Country's Finances
Countries with limited governments have fewer laws about what individuals and businesses can and can’t do. What's the net result? 
Fundamental Analysis
Lognormal and Normal Distribution
When and why do you use lognormal distribution or normal distribution for analyzing securities? Lognormal for stocks, normal for portfolio returns. 
Investing Basics
How Does Goodwill Affect Financial Statements?
Goodwill is a bit of a paradoxintangible, yet it is recorded as an asset on the purchasing company's balance sheet. 
Investing Basics
Using Normal Distribution Formula To Optimize Your Portfolio
Normal or bell curve distribution can be used in portfolio theory to help portfolio managers maximize return and minimize risk.