The Probability That House Sales Will Increase in the Next

question 160

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:

Futures Price

The agreed-upon price for the sale of an asset at a future date, typically used in commodities and financial instrument trading.

Stock Index Futures

Financial contracts that obligate the buyer to purchase, and the seller to sell, a specific stock index at a predetermined future date and price.

Multiplier

An economic factor that quantifies the impact of a change in one economic variable on another.

Euros

The official currency of the eurozone, which is used by 19 of the 27 European Union countries, known as the euro area.