Conditional Probabilityeasy
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A loan officer uses a scoring model: low-risk (LR, 80% of applications) and high-risk (HR, 20%). Default rates: 2% for LR, 15% for HR. An applicant defaults. What is P(HR|default)?
A loan officer uses a scoring model: low-risk (LR, 80% of applications) and high-risk (HR, 20%). Default rates: 2% for LR, 15% for HR. An applicant defaults. What is P(HR|default)?