Question 27

Exhibit 9-1. The confusion matrix for a classification method with Class 0 and Class 1 is given below.

Confusion Matrix
Actual\Predicted	0	1
0	100	30
1	10	80

Refer to Exhibit 9-1. What is the percent accuracy rate?

	a.	9.52%
	b.	7,52%
	c.	18.17%
	d.	81.82%

Question 28

Exhibit 15-2. You would like to invest in one of the three available investment plans: money market, bonds, or stocks. The payoffs (profits) of each plan under two possible future economic conditions, PE (poor economy) and GE (good economy) are shown below. The probability of the occurrence of PE is 0.4.

	PE	GE
Money Market	3000	3400
Bonds	1500	3500
Stocks	2800	3800

Suppose that before making the investment decision, you consider hiring an economist who can provide either U = unfavorable or F = favorable report concerning the future economic conditions. Assume that the following probability information is also available:

P(U|PE) = 0.8, P(F|PE) = 0.2

P(U|GE) = 0.7, P(F|GE) = 0.3.

Refer to Exhibit 15-2. What is the posterior probability P(PE|U)?

	a.	0.432
	b.	0.458
	c.	0.389
	d.	0.885