Question: Answer this question using Bayes' rule 7.2 You are a regulator for the Securities and Exchange Commission who is in charge of investigating whether a

Answer this question using Bayes' rule

7.2 You are a regulator for the Securities and Exchange Commission who is in charge of investigating whether a company has violated laws against insider trading. Your initial investigation has revealed no evidence of wrongdoing. However, you know that it is difficult to uncover secret activity, and that only of investigations will correctly identify guilt. Of course, if the company is innocent, there is no chance of finding anything. You also estimate that 1 in 5 instances of trading similar to this one are actually illegal. What is the probability that the company is guilty, given that your initial investigation found no evidence of wrongdoing

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