A Car Manufacturer Stated in Its Advertising That the Gas

question 98

Multiple Choice

A car manufacturer stated in its advertising that the gas mileage for its hybrids will be greater than 40 mpg on average. A consumer agency tested a sampling of the hybrids under a variety of conditions. Based on these tests, the agency concluded that the manufacturer was justified in making this claim. The process described is an example of:

• A) descriptive statistics.
• B) hypothesis testing.
• C) statistical inference.
• D) Both B and C are correct.

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Definitions:

Residual Dividend Policy

A strategy where dividends are based on earnings minus funds the firm retains to finance the equity portion of its investment and working capital requirements.

Special Dividend

A one-time distribution of earnings to shareholders, oftentimes an indication of excess cash the company wants to return.

Homemade Dividend

A concept where investors create their own dividend policy by selling a portion of their portfolio of equities instead of relying on company-issued dividends.

Liquidating Dividend

A type of dividend paid by a company that is returning a portion of the capital to its shareholders, typically during dissolution.