document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=261168>Question 261168</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A financial analyst estimates that the probability that the economy will experience a recession is 30%. She also believes that if there is a recession the probability that her mutual fund will increase in value is 20%. If no recession, the probability that the fund will increase is 75%. Find the probability that the mutual fund will increase in value.<BR>\n" );
document.write( "I think that the solution is the union of two complementary/mutually exclusive events: increase if there is crisis + increase if there is no crisis. 0.3*0.2+0.7*0.75 but according to the book the probability is a bit higher than what I've received by this </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #192540 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=192540\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> A financial analyst estimates that the probability that the economy will experience a recession is 30%. <BR>\n" );
document.write( "She also believes that if there is a recession the probability that her mutual fund will increase in value is 20%.<BR>\n" );
document.write( "If no recession, the probability that the fund will increase is 75%. <BR>\n" );
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document.write( "Find the probability that the mutual fund will increase in value.<BR>\n" );
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document.write( "I think that the solution is the union of two complementary/mutually exclusive events: increase if there is crisis + increase if there is no crisis. 0.3*0.2+0.7*0.75 but according to the book the probability is a bit higher than what I've received by this<BR>\n" );
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document.write( "Ans: According to Bayes yours is the correct answer.<BR>\n" );
document.write( "The book and/or the answer book is not always correct.<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H.\r<BR>\n" );
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