Definition of Compound probability:
A calculation to determine the likelihood of two independent events occurring at the same time. It is equal to the likely occurrence of the first event multiplied by the likely occurrence of the second event. The formula is used by insurance underwriters when accessing risks and the subsequent establishment of insurance premiums on various insurance products.
Compound probability is a mathematical term relating to the likeliness of two independent events occurring. Compound probability is equal to the probability of the first event multiplied by the probability of the second event. Compound probabilities are used by insurance underwriters to assess risks and assign premiums to various insurance products.
The most basic example of compound probability is flipping a coin twice. If the probability of getting heads is 50 percent, then the chances of getting heads twice in a row would be (.50 X .50), or .25 (25 percent). A compound probability combines at least two simple events, also known as a compound event. The probability that a coin will show heads when you toss only one coin is a simple event.
How to use Compound probability in a sentence?
- Compound probability is the product of probabilities of occurrences for two independent events known as compound events.
- The formula for calculation of compound probabilities differs based on the type of compound event, whether it is mutually exclusive or mutually inclusive.
Meaning of Compound probability & Compound probability Definition