Which of the Following Statements Are Not True

question 35

Multiple Choice

Which of the following statements are not true?

• A) An in-control process is simply one that is operating in a stable fashion, reflecting only natural random variation.
• B) An out-of-control "signal" occurs whenever a plotted point falls outside the two control limits.
• C) There is a strong analogy between the logic of control charting and hypothesis testing. The null hypothesis here is that the process is out-of-control.
• D) The two control limits are designed so that an in-control process generates very few false alarms, whereas a process not in control quickly gives rise to a point outside the limits.
• E) All of the above statements are true.

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Definitions:

Book Value

The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

Profitability Index

A financial metric that measures the profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Net Present Value

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used to evaluate the profitability of an investment.

Payback

The period of time required for the return on an investment to "repay" the original investment cost.