Which of the Following Statements Is True

question 116

Multiple Choice

Which of the following statements is true?

• A)The higher the discount rate, the higher the present value.
• B)The process of accumulating interest on interest is referred to as discounting.
• C)If money is worth 10% compounded annually, $1,100 due one year from today is equivalent to $1,000 today.
• D)If a single sum is due on December 31, 2015, the present value of that sum decreases as the date draws closer to December 31, 2015.

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Definitions:

Rejection Region

The rejection region is the range of values in hypothesis testing that leads to the rejection of the null hypothesis if the test statistic falls within this range.

Robust Estimator

An estimate method that is not overly sensitive to outliers or violations of assumptions by the underlying data-generating process.

Normality

In statistics, a condition in which a distribution approximates the normal distribution, characterized by a bell-shaped curve.

Consistent

In statistics, a property of an estimator indicating that as the sample size increases, it converges in probability to the true parameter value.