I the fiRst Step in Testing a Hypothesis Is to State

question 115

Multiple Choice

i. The first step in testing a hypothesis is to state the decision rule.
ii. To prevent bias, the level of significance is selected before setting up the decision rule and
Sampling the population.
iii. The fifth and final step in testing a hypothesis is taking a sample and, based on the decision rule,
Deciding if the null hypothesis should be rejected.

• A) (i), (ii), and (iii) are all correct statements.
• B) (i) is a correct statement but not (ii) or (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (i) and (ii) are correct statements but not (iii).
• E) (ii) and (iii) are correct statements but not (i).

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Definitions:

Risk-Adjusted Return

A measure of the return on an investment portfolio that has been adjusted for the risk the investor has taken, providing a more accurate depiction of the portfolio's performance.

Market Advances

Market advances refer to the number of stocks that have increased in value over a given trading day, often used as an indicator of market sentiment or strength.

Betas

A measure of the volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole.

Sharpe Measure

A method to calculate risk-adjusted return, comparing the return of an investment to its risk.