30f 3 (2 complete) Score: 66.67%, 2 of 3 pts 4.3.37 i Question Help * A municipa

Question

30f 3 (2 complete) Score: 66.67%, 2 of 3 pts 4.3.37 i 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 30% were rated B, and 20% were rated C Of the municipal bonds rated A 50% were issued by cities, 20% by suburbs, and 30 by rural areas. Of the municipal bonds rated B 70% were issued by cities, 20% by suburbs, and 10% by rural areas. Of the municipal bonds rated C, 90% were issued by atios, 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.) Ins er your answer in the remaining

Explanation / Answer

P(municipal bond is issued by a city) = P(city and A rating) + P(city and B rating) + P(city and C rating)

= 0.5x0.5 + 0.3x0.7 + .20x0.9

= 0.25 + 0.21 + 0.18

= 0.64

P(A rating | municipal bond is issued by a city) = P(city and A rating)/ P(municipal bond is issued by a city)

= 0.25/0.64

= 0.391

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