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financial experts estimate that the probability that the economy will experience a recession with in the...

financial experts estimate that the probability that the economy will experience a recession with in the next 12 months is 25%. They also believe that if the economy encounters a recession, the probability that their mutual funds will increase in value is 20%. If there is no recession, the probability that their mutual funds will increase in value is 75%. If the analyst’s mutual fund decreased in value, what is the probability that there was a recession?

a.0.6125

b.0.5625

c.0.5161

d.0.2500

Math   Statistics-And-Probability   
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Answer #1

TOPIC:Application of the Bayes' theorem.

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