Use Bayes' Rule to Find the Indicated Probability

question 9

Multiple Choice

Use Bayes' rule to find the indicated probability.
-Two stores sell a certain MP3 players.Store A has 34% of the sales,5% of which are of defective items,and store B has 66% of the sales,1% of which are of defective items.The difference in defective rates is due to different levels of pre-sale checking of the product.A person receives a defective item of this product as a gift.What is the probability it came from store B?

• A)0.22
• B)0.7083
• C)0.275
• D)0.5667

Differentiate between fixed-rate and variable-rate financial instruments.

Understand the use of T-bond futures in interest rate risk hedging.

Comprehend the role of swaps in interest rate risk management.

Recognize the implications of financing decisions on interest rate risk exposure.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members. It's the share of the company's profits, decided and managed by the board of directors, and paid out to shareholders.

Equity Sold

The process of selling ownership interest in a company in exchange for capital.

Net Capital Spending

The total expenditure on capital assets, minus any sales of existing assets.