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QUESTION

A bank analyst is studying the bank's loan portfolio to estimate the number of loans currently in default.

A bank analyst is studying the bank’s loan portfolio to estimate the number of loans currently in default.  She finds that the proportion of loans in the bank’s portfolio that are in default and are for property in California is 15%.  (i.e., P(D and C)= .15 where  D is default and C is a California customer.)  If 25% of the banks mortgages are in California, (i.e., P(C)= .250) calculate the probability of default given that a loan is in California (i.e., P(D|C))?

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