I in the Goodness-Of-Fit Test, the Chi-Square Distribution Is Used

question 54

Multiple Choice

i. In the goodness-of-fit test, the chi-square distribution is used to determine how well an observed set of observations "fits" an "expected" set of observations.
Ii) The sum of the expected frequencies and the sum of the observed frequencies must be equal.
Iii) If the computed value of chi-square is less than the critical value, reject the null hypothesis at a predetermined level of significance.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) and (ii) are correct statements, but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are false

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Definitions:

Return on Debt

A measure of a company's profitability relative to its total debt, indicating how effectively a company is using its borrowed funds.

Cost of Equity

The return that investors expect on their investment in a company, often calculated using models like the Capital Asset Pricing Model (CAPM).

Required Return

The minimum percentage return that an investor expects to achieve by investing in a particular asset.

M&M II

Modigliani and Miller Proposition II, a theory on capital structure, posits that the value of a firm is not affected by its capital structure under a certain market process.