Solve the Problem. -A Drug Company Is Running Trials on a New Test

question 55

Multiple Choice

Solve the problem.
-A drug company is running trials on a new test for anabolic steroids.The company uses the test on 400 athletes know to be suing steroids and 200 athletes known not to be using steroids.Of those using steroids,the new test is positive for 390 and negative for 10.Of those not using steroids,the test is positive for 10 and negative for 190.What is the estimated probability of a false negative result (the probability that an athlete using steroids will test negative) ?

• A)0.975
• B)0.05
• C)0.95
• D)0.025

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Definitions:

Option Contract

A financial contract that allows the purchaser the option, without any compulsory enforcement, to purchase or dispose of a base asset at an agreed-upon price, either on or prior to a predetermined date.

Exercise Price

The rate at which an option contract's holder has the right to purchase (for a call option) or dispose of (for a put option) the fundamental asset.

Strike Price

The predetermined price at which a call option can be purchased or a put option can be sold upon exercise.

Debt

Money that is owed or due to be paid to someone else, typically as loans or bonds.