The Probability of Incurring Bankruptcy Increases as the Firm's Debt/equity

question 39

True/False

The probability of incurring bankruptcy increases as the firm's debt/equity ratio decreases.

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Definitions:

Null Hypothesis

A hypothesis used in statistical testing that assumes there is no significant difference or effect and that the observed outcomes are due to chance.

Rejecting

In statistical hypothesis testing, the act of concluding that there is enough evidence to discard the null hypothesis in favor of the alternative hypothesis.

T-Test Statistic

A type of inferential statistic used to determine if there is a significant difference between the means of two groups, which may be related in certain features.

Formula

A concise way of expressing information symbolically, as in a mathematical or chemical formula, representing a relationship between variables.