four events: A = change in sequential EPS is positive next quarter .55 Ac= change in sequential EPS is 0 or negative next quarter .45 S= change in sequential EPS is positive in the prior quarter .55 Sc= change in sequential EPS is 0 or negative in the prior quarter .45 The first prob estimate you develop is P(change in sequential EPS is positive next quarter given change in sequential EPS is 0 or negative in the prior quarter) = 0.40 how is this solved? i cant seem to get to this answer? anyone have any ideas, thank you.
this is an example problem on page 333 of CFA volume one, it is example 7.
I dont think you can derive P(A/Sc) using data given… looks like they have made some estimates using trends in data or some other empirical/subjective analysis…