THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
The probability that interest rates on housing loans will go up in the next 6 months is estimated to be 0.20.The probability that house sales will decrease is estimated to be 0.6.The probability that interest rates will go up and house sales will decrease is estimated to be 0.15.
-The probability that house sales will go down given that interest rates will go up is:
A)0.95
B)0.90
C)0.75
D)0.80

Question

Quizplus · Accepted Answer

The probability that house sales will go down given that interest rates will go up is calculated using the formula for conditional probability: P(A|B) = P(A and B) / P(B). Here, A is the event that house sales will decrease, and B is the event that interest rates will go up. So, P(A|B) = 0.15 / 0.20 = 0.75.