An investor in Microsoft is worried the latest management earnings forecast is too aggressive and the company will fall short. His favorite analyst that covers the company is going to release his report the week before the earnings announcement. The report stands for the analyst’s report and Forecast stands for the earnings announcement. Prior ProbabilitiesConditional ProbabilitiesP(Good Report) = 0.2P(Below Forecast | Good Report) = 0.1P(Medium Report) = 0.5P(Below Forecast | Medium Report) = 0.4P(Bad Report) = 0.3P(Below Forecast | Bad Report) = 0.9What is the probability the earnings announcement is below the forecast? Briefly Discuss your result.

let G = Good Report M=Medium Report B=Bad Report From given P(G)=0.2 P(M)=0.5 P(B)=0.3 P(Bf|G)=0.1…

Answered: An investor in Microsoft is worried the…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

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An investor in Microsoft is worried the latest management earnings forecast is too aggressive and the company will fall short. His favorite analyst that covers the company is going to release his report the week before the earnings announcement. The report stands for the analyst’s report and Forecast stands for the earnings announcement.

Prior Probabilities	Conditional Probabilities
P(Good Report) = 0.2	P(Below Forecast \| Good Report) = 0.1
P(Medium Report) = 0.5	P(Below Forecast \| Medium Report) = 0.4
P(Bad Report) = 0.3	P(Below Forecast \| Bad Report) = 0.9