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A security manager is deciding whether to implement a new machine learning technique for fraud detection at a financial institution. Based on historical data,
A security manager is deciding whether to implement a new machine learning technique for fraud detection at a financial institution. Based on historical data, for every 1,000 transactions, 12 of them will be fraudulent. However, all techniques sometimes misidentify a legitimate transaction as fraudulent and raise an alert. After running a test of the machine learning technique, the manager estimates that for every 1,000 transactions the detection rate would be as follows: Alert No Alert Total Attempted Fraudulent Transaction 9 3 12 Legitimate Transaction 17 971 988 Total 26 974 1,000 According to the data, if a fraud alert is raised for a transaction, what is the probability that the transaction is legitimate? Round to the nearest thousandth. A. 0.017 B. 0.654 C. 0.346 D. 0.529
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