An Analyst Expects That 20 Percent of All Publicly Traded

question 28

Multiple Choice

An analyst expects that 20 percent of all publicly traded companies will experience a decline in earnings next year.The analyst has developed a ratio to help forecast this decline.If the company is headed for a decline,there is a 90% chance that this ratio will be negative.If the company is not headed for a decline,there is only a 10% chance that the ratio will be negative.The analyst randomly selects a company with a negative ratio.Based on Bayes' theorem,the posterior probability that the company will experience a decline is ____.

• A)18%
• B)26%
• C)44%
• D)69%

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Definitions:

Intravenous Line

A medical tubing inserted into a vein to administer fluids, medications, or nutrients directly into the bloodstream.

Pain-Relief Medications

Drugs specifically formulated to alleviate pain, ranging from over-the-counter analgesics to prescription opioids, depending on the intensity and type of pain.

Scale

A device or tool used for measuring weight or mass of objects or individuals.

Recur

Recur means to occur again or repeat after a period of absence, often used in the context of symptoms or conditions in medical discussions.