Suppose that we wish to predict whether a certain stock, Firm A, will issue a dividend this
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Question:
Suppose that we wish to predict whether a certain stock, Firm A, will issue a dividend this year ("Yes" or "No") based on x, last year's percent profit.
We examine a large number of companies and discover that:
- For prior probabilities, there is = 83% chance a company will issue a dividend.
- Firm A's last year percentage profit was x = 4.
- The estimated probability densities are as following:
= 0.09
= 0.07
Predict the probability that Firm A will issue a dividend.
Please round to 3 decimal places. Do not answer in percentage.
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