Question 85

The CFO of Keyland Bank in Belgium is concerned about exchange rates and the effect that rate movements may have on GDP. In particular, he is concerned with the euro appreciating against the U.S. dollar, as he knows the United States is one of Belgium's primary trading partners. He has asked his controller to assess the probability that either the euro will appreciate relative to the U.S. dollar or GDP will fall. The controller has determined the following probabilities:

• Probability that the euro will appreciate relative to the dollar: 38%
• Probability that GDP will fall given that the euro has appreciated: 82%
• Unconditional probability that GDP will fall: 44%

Based on the information listed, the controller should determine that the probability that either the euro will appreciate or GDP will fall will be closest to: