Explore BrainMass
Share

Stock probability

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 July 20, 2018, 12:48 pm ad1c9bdddf

Solution Summary

Stock probability in this case is determined.

$2.19