A Radio Story Reported a Study on the Makes and Models

question 352

Multiple Choice

A radio story reported a study on the makes and models of cars that were observed going through intersections in the Washington, D.C. area without stopping at the stop signs. According to the story, Volvos were heavily overrepresented; the fraction of cars running stop signs that were Volvos was much greater than the fraction of Volvos in the total population of cars in the D.C. area. This is initially surprising because Volvo has built a reputation as an especially safe car that appeals to sensible, safety-conscious drivers. How is this observation best explained?

• A)Volvo drivers are not willing to take risks that they would take in another, less safe car. Driving a Volvo leads to a propensity to run stop signs.
• B)Volvo drivers are not willing to take risks that they would take in another, less safe car. Driving a Volvo reduces the propensity to run stop signs.
• C)Volvo drivers are willing to take risks that they would not take in another, less safe car. Driving a Volvo reduces the propensity to run stop signs.
• D)Volvo drivers are willing to take risks that they would not take in another, less safe car. Driving a Volvo leads to a propensity to run stop signs.

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Definitions:

Corporate Restructuring

A broad term describing a number of ways in which companies are reorganized. Includes capital restructuring, mergers, and reorganizations in bankruptcy as well as changes in certain methods of doing business.

Capital Structure

The composition of a company's liabilities and shareholders' equity, which could include debt, common equity, preferred equity, among other securities, used to finance its operations and growth.

Divestitures

The process of selling off subsidiary business interests or investments as a strategic move for a company.

Proxy Solicitation

The process of gathering votes from shareholders to vote on corporate matters when they cannot attend the shareholder meeting in person.