Which of the Following Confidence Intervals Also Indicates a Significant

question 27

Multiple Choice

Which of the following confidence intervals also indicates a significant difference between treatments with α = .05?

• A)Estimate that μ₁ - μ₂ is in an interval between 2 and 10 with 90% confidence.
• B)Estimate that μ₁ - μ₂ is in an interval between -2 and 8 with 90% confidence.
• C)Estimate that μ₁ - μ₂ is in an interval between 2 and 10 with 95% confidence.
• D)Estimate that μ₁ - μ₂ is in an interval between -2 and 8 with 95% confidence.

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Definitions:

Cost of Equity

The return that investors expect for investing in a company's equity, reflecting the risk compared to risk-free assets.

WACC

Weighted Average Cost of Capital, a calculation used to estimate the average rate of return a company is expected to pay its security holders to finance its assets.

MM Model

Refers to the Modigliani-Miller theorem, which proposes that under certain market conditions and assumptions, the value of a firm is unaffected by its capital structure.

Bankruptcy Risk

The likelihood that a company will be unable to meet its financial obligations and may have to declare bankruptcy.