A Bank Is Interested in Determining Whether Its Customers' Checking

question 42

True/False

A bank is interested in determining whether its customers' checking balances are linearly related to their savings balances. A sample of n = 20 customers was selected and the correlation was calculated to be +0.40. If the bank is interested in testing to see whether there is a significant linear relationship between the two variables using a significance level of 0.05, the value of the test statistic is approximately t = 1.8516.

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Definitions:

Note Maturity

Note maturity is the date on which the principal amount of a promissory note, bond, or other debt instrument becomes due and payable.

Discount Rate

The interest rate used to discount future cash flows to their present value, often reflecting the cost of capital or investment risk.

Quick Assets

Assets that can be quickly converted into cash, usually including cash, marketable securities, and accounts receivable.

Temporary Investments

Assets that are not intended to be held for long periods but are bought with the intention of being converted back into cash within a short timeframe.