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d) (5 points) Capital Two is a financial services firm that specializes in credit scoring in B2B environments. Assuming Capital Two is infallible (perfectly

 

d) (5 points) Capital Two is a financial services firm that specializes in credit scoring in B2B environments. Assuming Capital Two is infallible (perfectly accurate), what would be the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser? Unfortunately, Capital Two is not perfectly accurate. In fact, Capital Two has shared with Buddyweiser information about the accuracy of its forecast. For customers of this type that ended up defaulting on their financial obligations, Capital Two produced a prediction of default in 80% of the occasions and a prediction of no default in 20% of the occasions. For customers that ended up honouring their financial obligations, Capital Two produced a prediction of no default in 90% of the occasions, and a prediction of default in 10% of the occasions. Default No default Prediction of default 80% 10% Prediction of no Default 20% 90% e) (5 points) Taking this information about Capital Two's accuracy, what is the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser?

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