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Bayes formula

ratboy

New Member
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
 
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