It is known about two shares A and B that they were issued by enterprises of the same industry.

| September 8, 2021 | education

It is known about two shares A and B that they were issued by enterprises of the same industry. The probability that stock A will rise in price tomorrow is 0.25. The probability that both stocks A and B will rise in price tomorrow is 0.14. Suppose you know that stock A will rise in price tomorrow. What is the likelihood that stock B will rise in price tomorrow?

If stock B rises in price, then only together with stock A.

The likelihood of a rise in the price of shares A and B depends on the likelihood of a rise in the price of share A.

If stock A rises exactly in price, then the probability of this event is 1.

Let x be the probability of a rise in the price of stock B. Stock A and B will rise in price together.

The probability of a rise in the price of stock A is 1.

Let’s compose and solve the equation:

1 / 0.25 = x / 0.14;

x = 1 * 0.14 / 0.25;

x = 0.56.

The probability of a rise in the price of share B is 0.56.



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