Exhibit 4-4

question 27

Short Answer

Exhibit 4-4.An investor is keeping a careful eye on the real estate markets in Las Vegas and the Inland Empire.The following are her predictions for the real estate market in 2012.
• With 0.32 probability,foreclosures will increase in Las Vegas.
• With 0.46 probability,foreclosures will increase in Las Vegas or the Inland Empire.
• With 0.27 probability,foreclosures will increase in Las Vegas and the Inland Empire.
Refer to Exhibit 4-4.What is the probability that foreclosures will increase in the Inland Empire given that they increased in Vegas?

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Definitions:

Accounts Receivable

Represents money owed by customers to a company in exchange for goods or services that have been delivered but not yet paid for.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company's balance sheet.

Prepaid Expense

Payments made in advance for goods or services to be received in the future, recorded as an asset on the balance sheet until the expense is incurred.

Interest Revenue

Income earned from the lending of money or from investments in interest-bearing accounts.