If the Probability of a Type I Error (α) Is

question 5

Multiple Choice

If the probability of a Type I error (α) is .05, then the probability of a Type II error (β) must be

• A) .05.
• B) .95.
• C) .025.
• D) Cannot be computed.

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Definitions:

Insider Trading

The unlawful act of buying and selling stocks for personal gain using privileged information that is not publicly available.

Dividend

A distribution of corporate profits to the corporation’s shareholders in proportion to the number of shares held.

Securities Act

A 1933 United States law that regulates the sale of securities to the public, requiring transparency to help prevent fraud.

Market Capitalization

The total market value of a company's outstanding shares of stock, calculated by multiplying the stock's price by the total number of shares.