To Construct an Interval Estimate for the Difference Between the Means

question 10

Multiple Choice

To construct an interval estimate for the difference between the means of two populations when the standard deviations of the two populations are unknown, we must use a t distribution with (let n₁ be the size of sample 1 and n₂ the size of sample 2) _____ degrees of freedom.

• A) n₁ + n₂
• B) n₁ + n₂ - 1
• C) n₁ + n₂ - 2
• D) n₁ - n₂ + 2

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Definitions:

Net Operating Income

A measure of a company's profitability, calculated as the difference between its total revenue and operating expenses, excluding taxes and interest.

Return On Investment

A financial ratio used to calculate the profitability of an investment, comparing the gain from an investment relative to its cost.

Residual Income

The income that remains after subtracting from the net operating income the cost of capital charged for utilizing the capital in generating the net operating income.

Minimum Required Rate

The lowest acceptable rate of return on an investment, often used in the context of capital budgeting.