The Probability That House Sales Will Increase in the Next

question 54

Multiple Choice

The probability that house sales will increase in the next 6 months is estimated to be 0.25.The probability that the interest rates on housing loans will go up in the same period is estimated to be 0.74.The probability that house sales or interest rates will go up during the next 6 months is estimated to be 0.89.The events increase in house sales and increase in interest rates in the next 6 months are

• A)independent.
• B)mutually exclusive.
• C)collectively exhaustive.
• D)None of the above.

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Definitions:

Exchange Rate

The price of one currency in terms of another, determining how much foreign currency can be exchanged for a unit of domestic currency.

Financial Transactions

Activities involving the exchange of money between parties, including buying, selling, lending, and borrowing.

Purchasing Power Parity

A theory that states that in the absence of transportation and other transaction costs, identical goods should have the same price in different countries when prices are converted into a common currency.

Exchange Rates

The valuation of one currency in the process of being exchanged for another.