The Acme Candy Company Claims That 60 $\mu - 2 \sigma$

question 12

Multiple Choice

The Acme Candy Company claims that 60 % of the jawbreakers it produces weigh more than 0.4 ounces. Suppose that 800 jawbreakers are selected at random from the production lines. Would it be significant for this sample of 800 to contain 494 jawbreakers that weigh more than 0.4 ounces? Consider as significant any result that differs from the mean by more than 2 standard deviations. That is, significant values are either less than $\mu - 2 \sigma$ or greater than $\mu + 2 \sigma$

• A) Yes
• B) No

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Definitions:

Required Returns

The minimum expected return on an investment, determined by the investor's risk tolerance and the investment's risk level.

Diversifiable Risks

Risks that can be reduced or eliminated through diversification in an investment portfolio.

Beta

A measure of a security's volatility in relation to the overall market; used in the capital asset pricing model to determine the expected return of an asset.

Risk-Free Rate

The rate of return of an investment with no risk of financial loss, typically represented by government bonds.