Biotech Values

[rfj1862]

Puzzle

Having purchased BCRX a few months back--and after witnessing the recent speculative frenzy--I was inspired to buy "Mean Markets and Lizard Brains: How to Profit from the New Science of Irrationality," written by Terry Burnham.

According to Burnham, "part of the cause of our individual irrationality is that we aren't very good at doing calculations." As proof, he poses the following puzzle:

"Imagine that you are a doctor and one of your patients asks to take an HIV test. You assure her that the test is unnecesssary as only one woman out of a thousand with her age and sexual history is infected. She insists, and sadly the test result indicates viral infection. If the HIV test is 95% accurate, what is the change that your patient is actually sick?"

Anyone know the answer? If so, how did you arrive at it? When doctors were asked this question, they all got it wrong. The answer is given in the book, but I can't figure out how he arrived at it.