Explore BrainMass
Share

Stock probability

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

Please explain how to solve this problem.

An investment advisor recommends the purchase of shares in Probaballisitics, Inc.. He has made the following predictions:

P(Stock goes up 20% | Rise in GDP) = .6
P(Stock goes up 20% | Level GDP) = .5
P(Stock goes up 20% | Fall in GDP) = .4

An economist has predicted that the probability of a rise in the GDP is 35%, whereas the probability of a fall in the GDP is 40%.
a. What is the probability that the stock will go up 20%?
b. We have been informed that the stock has gone up 20%. What is the probability of a rise or fall in the GDP?

© BrainMass Inc. brainmass.com September 24, 2018, 11:38 pm ad1c9bdddf - https://brainmass.com/math/probability/stock-probability-341547

Solution Summary

Stock probability in this case is determined.

$2.19