For the Next Questions, Determine Which Is the Correct Distribution

question 7

Multiple Choice

For the next questions, determine which is the correct distribution.
-95% Confidence Interval for . The sample data appear to come from a normally distributed population.

• A) Normal distribution
• B) Student t distribution
• C) Chi square distribution
• D) None of the above

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Definitions:

Risk Premium

The extra return expected by an investor for holding a risky asset instead of a risk-free asset, serving as compensation for bearing additional risk.

Arbitrage Opportunity

An arbitrage opportunity is the chance to buy an asset at a low price in one market and sell it at a higher price in another, taking advantage of the price difference for profit.

Expected Return

The anticipated amount of returns an investment is expected to generate, calculated as a weighted average of possible returns, based on their probabilities.

Risk-free Rate

The theoretical return on an investment with zero risk, often represented by the yield on government securities like U.S. Treasury bills.