Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

For any event that has multiple outcomes with different probabilities, it can be helpful and illustrative to construct a chart or diagram of the possible outcomes. Tree diagrams are a useful example ...

Tree diagrams are a way of showing combinations of two or more events. Each branch is labelled at the end with its outcome and the probability is written alongside the line. Two events are independent ...

Two events are independent if the probability of the first event happening has no impact on the probability of the second event happening. For example, the probability of rolling a 6 on a die will not ...