TABLE 9-2 a Student Claims That He Can Correctly Identify Whether a Whether

question 22

Multiple Choice

TABLE 9-2
A student claims that he can correctly identify whether a person is a business major or an agriculture major by the way the person dresses. Suppose in actuality that if someone is a business major, he can correctly identify that person as a business major 87% of the time. When a person is an agriculture major, the student will incorrectly identify that person as a business major 16% of the time. Presented with one person and asked to identify the major of this person (who is either a business or an agriculture major) , he considers this to be a hypothesis test with the null hypothesis being that the person is a business major and the alternative that the person is an agriculture major.
-Referring to Table 9-2, what would be a Type I error?

• A) Saying that the person is a business major when in fact the person is a business major
• B) Saying that the person is a business major when in fact the person is an agriculture major
• C) Saying that the person is an agriculture major when in fact the person is a business major
• D) Saying that the person is an agriculture major when in fact the person is an agriculture major

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Definitions:

Earnings Per Share

A company's profit divided by the number of outstanding shares of its common stock, indicating the company's profitability on a per-share basis.

Cash Coverage Ratio

A liquidity ratio that measures a company’s ability to pay off its debt with cash and cash equivalents, indicating financial health.

Operating Activities

The section of a company's cash flow statement that reveals the cash generated or used in the company’s primary business operations.

Interest Expense

The expense an entity faces for using borrowed capital over a specific time frame.