Bayes formula

[ratboy]

Hi

Question in practice exam:

P(G) = probability of economy growing = 50%
P(R) = probability of economy in recession = 50%
P(U) = probability of ABC stock going up = 37.5%

The question is what's the probability of the economy growing if the stock goes up.

The answer is

P(G I U) = P(G) x P(U I G) / P(U)
P(G I U) = 0.5 x 0.6 / 0.375

How do you get 0.6?

Thanks
David

 

[David Harper CFA FRM]

I can't find the question to which this refers (cc @Nicole Seaman ). It sounds like one of mine but not certain ....

 

[ratboy]

I can't find the question to which this refers (cc @Nicole Seaman ). It sounds like one of mine but not certain ....

It's from one of the practice exams in Schwesers books but I'm pretty sure they've omitted something in the question as I can't see how it can be solved without more info