Find the Indicated Probability If One of the Results Is Randomly Selected, What Is

question 96

Multiple Choice

Find the indicated probability.
-Refer to the table which summarizes the results of testing for a certain disease. $$\begin{array} { l | c c } & \text { Positive Test Result } & \text { Negative Test Result } \\\hline \text { Subject has the disease } & 111 & 4 \\\text { Subject does not have the disease } & 11 & 172\end{array}$$ If one of the results is randomly selected, what is the probability that it is a false negative (test indicates the person does not have the disease when in fact they do) ? What does this probability suggest about the accuracy
Of the test?

• A) 0.0134; The probability of this error is low so the test is fairly accurate.
• B) 0.591; The probability of this error is high so the test is not very accurate.
• C) 0.0369; The probability of this error is low so the test is fairly accurate.
• D) 0.0348; The probability of this error is low so the test is fairly accurate.

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Definitions:

Security Analysis

The process of examining and evaluating the financial health of securities for investment purposes, often involving fundamental or technical analysis.

Top-Down

An investment strategy that starts with global or macroeconomic factors before identifying specific stocks or sectors.

Bottom-Up

An investment approach that focuses on the analysis of individual stocks and de-emphasizes the significance of macroeconomic cycles and market cycles.

Derivatives

Financial securities whose value is derived from the value of an underlying asset or group of assets, such as futures and options.