An Analyst Expects That 20 Percent of All Publicly Traded

Multiple Choice

An analyst expects that 20 percent of all publicly traded companies will experience a decline in earnings next year.The analyst has developed a ratio to help forecast this decline.If the company is headed for a decline,there is a 90% chance that this ratio will be negative.If the company is not headed for a decline,there is only a 10% chance that the ratio will be negative.The analyst randomly selects a company with a negative ratio.Based on Bayes' theorem,the posterior probability that the company will experience a decline is ____.

A) 18%
B) 26%
C) 44%
D) 69%