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amanchawla469@gmail.com
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Hello , Please someone explain the answers of this question as i did not understand anything. The question is underneath and also I’m providing the solution if needed

Solution: A. We can set up the equation using the total probability rule: P(pass test) = P(pass test|survivor)P(survivor) + P (pass test|non-survivor)P(non-survivor) We know that P(survivor) = 1 – P(non-survivor) = 1 – 0.40 = 0.60. Therefore, P(pass test) = 0.55 ...

probability
amanchawla469@gmail.com
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2. You have developed a set of criteria for evaluating distressed credits. Companies that do not receive a passing score are classed as likely to go bankrupt within 12 months. You gathered the following information when validating the criteria: ■ Forty percent of the companies to which the test is administered will go bankrupt within 12 months: P(non-survivor) = 0.40. ■ Fifty-five percent of the companies to which the test is administered pass it: P(pass test) = 0.55. ■ The probability that a company will pass the test given that it will subsequently survive 12 months, is 0.85: P(pass test | survivor) = 0.85. Using the information validating your criteria, calculate the following: A. What is P(pass test | non-survivor)? B. Using Bayes’ formula, calculate the probability that a company is a survivor, given that it passes the test; that is, calculate P(survivor | pass test). C. What is the probability that a company is a non-survivor, given that it fails the test? D. Is the test effective?

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please can anyone explain this in detail because i am having difficulties in probability

probability