Applying Statistical Inference: an Example If You Reject the Null

question 21

Multiple Choice

Applying Statistical Inference: An Example If you reject the null hypothesis when it is actually true,

• A)you have committed a Type 1 error.
• B)you have committed a Type 2 error.
• C)you should report a significant treatment effect.
• D)you should revise your level of significance.

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Definitions:

Call Premium

The extra amount over the bond's face value that investors must pay to call away a bond before its maturity date.

Term Structure

The connection between different terms or maturities and interest rates or bond yields.

Fisher Formula

An equation used to identify the nominal interest rate or the required rate of return on an investment, taking inflation into account to determine the real interest rate.

Coupon

The interest rate on a bond, usually expressed as a percentage of the face value and paid at regular intervals.