Exhibit 12-3 In Order to Determine Whether or Not a Particular Medication

question 18

Multiple Choice

Exhibit 12-3
In order to determine whether or not a particular medication was effective in curing the common cold, one group of patients was given the medication, while another group received sugar pills. The results of the study are shown below. We are interested in determining whether or not the medication was effective in curing the common cold.
-Refer to Exhibit 12-3. The number of degrees of freedom associated with this problem is

• A)4
• B)149
• C)1

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Definitions:

Good Economy

A state of economic health characterized by strong growth, low unemployment, and stable prices.

Risk-Free Rate

The presumptive return on an investment without risk, usually demonstrated by the interest rates on state securities.

Expected Return

The anticipated return on an investment, calculated based on the probabilities of various outcomes.

Beta

A measure of how much risk or volatility from the market a stock can be expected to be exposed to compared to the overall market.