If the Market Interest Rate Rises from 8% to 10

question 46

Multiple Choice

If the market interest rate rises from 8% to 10%, the net present discounted value of a ten-year investment project will

• A)fall more than a two-year project
• B)rise more than a two-year project
• C)fall less than a two-year project
• D)rise less than a two-year project
• E)not be significantly affected

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Definitions:

Null Hypothesis

Null hypothesis refers to a statement used in statistics that suggests no statistical significance exists in a set of given observations.

Alternative Hypothesis

The alternative hypothesis is a statement in hypothesis testing that proposes a specific relationship between variables, contrasting the null hypothesis.

One-sided Test

A hypothesis test in which the region of rejection is on only one side of the sampling distribution, assessing either a lower or upper tail.

Alternative Hypothesis

In statistical analysis, the hypothesis that proposes a difference or relationship between two variables, counter to the null hypothesis.