TABLE 4-2 An Alcohol Awareness Task Force at a Big-Ten University Sampled

question 109

Multiple Choice

TABLE 4-2
An alcohol awareness task force at a Big-Ten university sampled 200 students after the midterm to ask them whether they went bar hopping the weekend before the midterm or spent the weekend studying, and whether they did well or poorly on the midterm. The following result was obtained.

-Referring to Table 4-2, what is the probability that a randomly selected student did well on the midterm or went bar hopping the weekend before the midterm?

• A) 30/200 or 15%
• B) (80 + 30)/200 or (30 + 80)/200 or 55%
• C) (30 + 70)/200 or (70 + 30)/200 or 50%
• D) (80 + 30 + 70)/200 or (110 + 100 - 30)/200 or 90%

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Definitions:

Unbiased Forward Rate

Theoretically, a forward rate in the currencies market that is equal to the spot rate adjusted for interest rate differentials, without any prediction of future direction.

Forward Rate

The agreed-upon price for a financial transaction that will occur at a future date, often used in the context of foreign exchange or interest rates.

Spot Rate

The current market price of a currency, security, or commodity available for immediate settlement.

Absolute Purchasing Power Parity

A theory that suggests that, in the absence of transaction costs and other barriers, identical goods and services in different countries should have the same price when expressed in a common currency.