Which of the Following Statements Is Most Correct

question 22

Multiple Choice

Which of the following statements is most correct?

• A)firms with relatively low debt ratios have higher expected returns when the business is good.
• B)firms with relatively low debt ratios are exposed to risk of loss when the business is poor.
• C)firms with relatively high debt ratios have higher expected returns when the business is bad.
• D)firms with relatively high debt ratios have higher expected returns when the business is good.
• E)none of the above.

---

Definitions:

Random Sampling Errors

Variability in sample statistics from sample to sample due to the method of choosing a random subset of the population.

Significance Tests

Statistical tests used to determine if the results of a study are likely to be due to chance or if they are significant.

Significance Level

The probability of rejecting the null hypothesis when it is actually true, often denoted as alpha (α) and typically set at 0.05 or 5%.

Null Hypotheses

A statement in statistical inference that proposes no significant difference or no effect, serving as the default assumption to be tested.