How can you tell if a question is Bayes Thereom?

Watch
Announcements
Thread starter 3 years ago
#1
A bank classifies borrowers as high risk or low risk. 15% of its loans are made to those classified as high risk. Of all loans, 5% are in default and 40% of those in default were made to high-risk borrowers. What is the probability that a high-risk borrower will default?

Like how can you tell this question is Bayes Thereom?
0
3 years ago
#2
Bayes’ theorem usually raises its head when we know P(A given B) and need to find the value of P(B given A). This question is a case in point. Let P(H) be the probability that a borrower is in the high risk group and P(D) be the overall probability of default. The question gives us P(H given D) and asks us for P(D given H).
1
X

new posts
Back
to top
Latest
My Feed

Oops, nobody has postedin the last few hours.

Why not re-start the conversation?

see more

See more of what you like onThe Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Poll

Join the discussion

Should there be a new university admissions system that ditches predicted grades?

No, I think predicted grades should still be used to make offers (592)
34.06%
Yes, I like the idea of applying to uni after I received my grades (PQA) (720)
41.43%
Yes, I like the idea of receiving offers only after I receive my grades (PQO) (347)
19.97%
I think there is a better option than the ones suggested (let us know in the thread!) (79)
4.55%