From Past Records It Is Known That the Average Life

question 41

Multiple Choice

From past records it is known that the average life of a battery used in a digital clock is 305 days. The battery life is normally distributed. The battery was recently modified to last longer. A sample of 20 of the modified batteries was tested. It was discovered that the mean life was 311 days and the sample standard deviation was 12 days. We want to test at the 0.05 level of significance whether the modification increases the life of the battery. What is our decision rule?

• A) Do not reject the null hypothesis if computed t is 1.96 or greater
• B) Reject the null hypothesis if computed t is less than 1.96
• C) Do not reject the null hypothesis if computed t is 1.729 or greater
• D) Reject the null hypothesis if computed t is 2.086 or greater
• E) None of these statements are true

---

Definitions:

Effective Rate

The total calculated interest on a loan or investment annually, including compounding, differing from the nominal interest rate.

Effective Annualized Rate

The interest rate that is annualized using compounding over a given period, providing a true reflection of the financial cost.

Simple Interest

Interest calculated on the principal portion of a loan or deposit, without compounding over time.

GICs

Guaranteed Investment Certificates, a type of Canadian investment that offers a guaranteed rate of return over a fixed period of time.