Financial analysts have developed models based on financial ratios that predict whether or not a company will go bankrupt within the next year. In a test of one such model, the model correctly predicted the bankruptcy of 88% of firms that in fact did fail. The model also correctly predicted the non-bankruptcy for 82% of firms that did not fail. Suppose that the model maintains the same reliability when applied to a new group of 82 firms, of which 7 fail in the year following the time at which the model makes its predictions. Define the event F as firm failure and event B as the outcome of a test for bankruptcy. Given this information, what is the probability that a
Financial analysts have developed models based on financial ratios that predict whether or not a company will go bankrupt within the next year. In a test of one such model, the model correctly predicted the bankruptcy of 88% of firms that in fact did fail. The model also correctly predicted the non-bankruptcy for 82% of firms that did not fail. Suppose that the model maintains the same reliability when applied to a new group of 82 firms, of which 7 fail in the year following the time at which the model makes its predictions. Define the event F as firm failure and event B as the outcome of a test for bankruptcy. Given this information, what is the probability that a
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Financial analysts have developed models based on financial ratios that predict whether or not a company will go bankrupt within the next year.
In a test of one such model, the model correctly predicted the bankruptcy of 88% of firms that in fact did fail. The model also correctly predicted the non-bankruptcy for 82% of firms that did not fail.
Suppose that the model maintains the same reliability when applied to a new group of 82 firms, of which 7 fail in the year following the time at which the model makes its predictions.
Define the
Given this information, what is the probability that a firm will fail P(F)?
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