Homework: HW. 4.3 Score: 0 of 1 pt 4.3.37 Save 3 of 3 (2 complete) Hw Score: 33.
ID: 3329625 • Letter: H
Question
Homework: HW. 4.3 Score: 0 of 1 pt 4.3.37 Save 3 of 3 (2 complete) Hw Score: 33.33%, Question Help * A municipal bond service has three rating categories (A, B, and C). Suppose that in the past year, of the municipal bonds issued thoughout a country, 50% were rated A, 40% were rated B, and 10% were rated C. Of the municipal bonds rated A, 60% were issued by cities, 30% by suburbs, and 10% by rural areas. Of the rmunicipal bonds rated B, 70% were issued by cities, 10% by suburbs, and 20% by rural areas. Of the municipal bonds rated C, 90% were issued by cities, 5% by suburbs, and 5% by rural areas. Complete (a) through (c) below. a. If a new municipal bond is to be issued by a city, what is the probability that it will receive an A rating? (Round to three decimal places as needed.) Enter your answer in the answer box and then click Check Answer ining- Clear All Check Answer escExplanation / Answer
a) probability that municipal bond is to be issued by a city =P( rated A and issued by city+rated B and issued by city+rated C and issued by city) =0.5*0.6+0.4*0.7+0.1*0.9=0.67
threfore pobability bond receive an A rating given issed by a city
=P( rated A and issued by city)/P(issued by city) =0.5*0.6/0.67 =0.448
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