Test 10 – Simple Linear Regression (LM10 — Practice Test | Eightball · Eightball

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Test 10 – Simple Linear Regression (LM10

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A stock has a $30%$ prior probability of default within one year. If default occurs, the probability of a credit downgrade is $80%$ . If default does not occur, the probability of a downgrade is $25%$ . Given that a downgrade occurs, the updated probability of default is closest to:

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