medium · Quantitative Finance prob-stats
A quantitative signal correctly identifies outperformers 80% of the time, but also gives a false positive for non-outperformers 30% of the time.
If 20% of all stocks are genuine outperformers, what is the probability a stock genuinely outperforms given the signal fired?
- 16%.
- 40%.
- 50%.
- 80%.
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