The National Club Association Does Periodic Studies on Issues Important

question 102

Multiple Choice

The National Club Association does periodic studies on issues important to its membership. The 2012 Executive Summary of the Club Managers Association of America reported that the average country club initiation fee was $31,912. Suppose a random sample taken in 2009 of 12 country clubs produced the following initiation fees: Based on the sample information, can you conclude at the α = 0.05 level of significance that the average 2009 country club initiation fees are lower than the 2008 average? Conduct your test at the level of significance.

• A) Because t = -0.4324 is not less than t critical = -1.4512, do not reject Ho. The 2009 average country club initiation fee is not less than the 2008 average.
• B) Because t = -0.4324 is not less than t critical = -1.4512, reject Ho. The 2009 average country club initiation fee is less than the 2008 average.
• C) Because t = -0.5394 is not less than t critical = -1.7959, do not reject Ho. The 2009 average country club initiation fee is not less than the 2008 average.
• D) Because t = -0.5394 is not less than t critical = -1.7959, reject Ho. The 2009 average country club initiation fee is less than the 2008 average.

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Definitions:

Capital Asset Pricing Model

An approach outlining the connection between inherent risks and the expected return of assets, with a focus on stocks.

SML

The Security Market Line, a graphical representation used in the capital asset pricing model (CAPM) to show the relationship between the risk of an investment and its expected return.

Expected Return

The anticipated gain or loss on an investment, considering both the risk and return.

Expected Return

Expected return is the anticipated profit or loss from an investment, based on the potential outcomes and their probabilities, often used to evaluate investment choices.