Question

Imagine you are a financial analyst at an investment bank. According to your research

of publicly-traded companies, 60% of the companies that increased their share price by

more than 5% in the last three years replaced their CEOs during the period.

At the same time, only 35% of the companies that did not increase their share price by

more than 5% in the same period replaced their CEOs. Knowing that the probability that

the stock prices grow by more than 5% is 4%, find the probability that the shares of a

company that fires its CEO will increase by more than 5%.​

Answer 1

Answer:

Imagine you are a financial analyst at an investment bank. According to your research

of publicly-traded companies, 60% of the companies that increased their share price by

more than 5% in the last three years replaced their CEOs during the period.

At the same time, only 35% of the companies that did not increase their share price by

more than 5% in the same period replaced their CEOs. Knowing that the probability that

the stock prices grow by more than 5% is 4%, find the probability that the shares of a

company that fires its CEO will increase by more than 5%.