medium · FRM Part 2 Operational Risk
A bank's transaction monitoring system flags wire patterns for potential money laundering. The system has an 80% detection rate (power) and a 5% false alarm rate.
Given that only 0.2% of the bank's customers engage in laundering, what is the probability that an alert represents a true positive (P(L | Alert))?
- 7.4%
- 4.0%
- 3.1%
- 80.0%
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