Financial Risk Manager Part 1
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An analyst develops the following probability distribution about the state of the economy and the market.
| Initial Probability P(A) | Conditional Probability P(B | A) |
|--------------------------|----------------------------------|
| Good economy 60% | Bull market 50% |
| | Normal market 30% |
| | Bear market 20% |
| Poor economy 40% | Bull market 20% |
| | Normal market 30% |
| | Bear market 50% |
Which of the following statements about this probability distribution is least likely accurate?
A
The probability of a normal market is 0.30.
B
The probability of having a good economy and a bear market is 0.12.
C
Given that the economy is good, the chance of a poor economy and a bull market is 0.15.
D
Given that the economy is poor, the combined probability of a normal or a bull market is 0.50.