Question

The coming year is expected to be a good one with probability 0.70. Given that it is a good year, you expect that a dividend will be declared with probability 0.90. However, if it is not a good year, then a dividend will occur with probability 0.20.
a. Draw a probability tree for this situation, with the most appropriate choice for the first branch.
b. Find the probability that it is a good year and a dividend is issued.
c. Find the probability that a dividend is issued.
d. Find the conditional probability that it is a good year, given that a dividend is issued.


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  • CreatedNovember 11, 2015
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