The Power of a Test Is the Probability That It

question 78

Short Answer

The power of a test is the probability that it will lead us to: $\begin{array}{|l|l|}\hline A.&\text {reject the null hypothesis when it is true. }\\\hline B.&\text {reject the null hypothesis when it is false. }\\\hline C.&\text {fail to reject the null hypothesis when it is true. }\\\hline D.&\text { fail to reject the null hypothesis when it is false. }\\\hline \end{array}$

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often described as the weighted average time until all cash flows are paid.

Basis Points

A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equal to 1/100th of 1%.

Duration

An indicator of how the price of a bond or other debt security responds to interest rate fluctuations, typically represented in years.

Market Yield

Market yield refers to the current rate of return anticipated on a bond if held to maturity, factoring in both its price and interest payouts compared to the market's interest rates.