Long-Time Friends, Pat and Tom, Agree on Many Things, but Not

question 37

Multiple Choice

Long-time friends, Pat and Tom, agree on many things, but not the outcome of the American League pennant race and the World Series. Pat is originally from Boston, and Tom is from New York. They have a steak dinner bet on next year's race, with Pat betting on the Red Sox and Tom on the Yankees. Both are convinced they will win. What probability assessment technique is being used by the two friends?

• A) Subjective probability
• B) Classical probability
• C) Relative frequency probability
• D) Independent probability

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Definitions:

More Liquid

Describes an asset or market that allows for assets to be bought or sold quickly without significantly affecting the asset's price.

Front-end Commission

A fee paid when purchasing shares of a mutual fund, upfront, which reduces the amount invested from the start.

Expense Ratio

The annual fee that all funds and exchange-traded funds charge their shareholders, expressed as a percentage of the fund's total assets.

Rate of Return

The gain or loss on an investment over a specified time period, expressed as a percentage of the investment's cost.