Use the Guidelines to Evaluate the Study

question 99

Multiple Choice

Use the guidelines to evaluate the study. From the information given, what is the biggest flaw in the study?
-A researcher was interested in the exercise habits of the residents of the village of Pine Heights. She interviewed every 10th person who left the post office until she had interviewed 100 people. Each
Of the people interviewed was asked to rate their exercise level according to the following scheme
"(1) very little, (2) some, (3) moderate, (4) a lot, (5) extensive". The researcher reported that, on
Average, the residents of Pine Heights exercise moderately.

• A)Participation bias
• B)Confounding variables
• C)Measurement of the variable is not well defined
• D)The source of the study
• E)Selection bias

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Definitions:

Cost of New Equity

The cost of obtaining additional funding through the issuance of new equity, considering underwriting fees and other issuance costs.

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its owners as dividends.

Target Capital Structure

The relative amount of debt, preferred stock, and common equity that the firm desires. The weighted average cost of capital should be based on these target weights.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, a crucial part of capital budgeting and often calculated using models like CAPM.