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. 34. Franklin is a forecasting manager is superb Inc. He is forecasting a stock's performance in 2013 conditional on the state of the economy
. 34. Franklin is a forecasting manager is superb Inc. He is forecasting a stock's performance in 2013 conditional on the state of the economy of the country in which the firm is based. He divides the economy's performance into three categories of Above Average, Average and Below Average and the stock's performance into three categories of outperform, neutral and underperform. He estimates the following: The probability that the state of economy is Above Average is 40%. If the state of the economy is Above Average, the probability that the stock outperform is 75% and the probability that the stock underperform is 15%. The probability that the state of the economy is Average is 35%. If the state of the economy is Average, the probability that the stock outperform is 55% and the probability that the stock underperform is 25%. If the state of the economy is below average, the probability that the stock outperform is 10% and the probability that the stock underperform is 80%. Anderson is franklin's supervisor, asks him, to estimate the probability that the state of the economy is average given that the stock performance is neutral. What is the best assessment of that probability
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