Question: A market Analysis system is developed to decide when to buy securities. The analyst gathered. validating the system. Assume there are two types of

A market Analysis system is developed to decide when to buy securities.

A market Analysis system is developed to decide when to buy securities. The analyst gathered. validating the system. Assume there are two types of investments, good vs poor. 5% of investments are poor investment: P(poor investment)=0.05. 80% of investments pass the test of the system, i.e. scoring good: P(pass test) = 0.80. The system correctly identifies 90% of poor investments given a poor investment, i.e. P(not pass te Question (A): What is the probability of good investment? Question (B): Using Bayes's formula, calculate the probability that an investment is a poor invest i.e. P(poor investment | pass test)?

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