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Stock probability

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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?

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Solution Summary

Stock probability in this case is determined.