Which of the Following Exemplifies a Type I Error of Incorrectly

question 157

Multiple Choice

Which of the following exemplifies a Type I error of incorrectly rejecting a true null hypothesis?

• A) Interrupting the production process in order to adjust machinery that needs no adjusting.
• B) Switching to a new supplier of raw materials although the performance of the old one was satisfactory.
• C) Condemning a firm for ignoring pollution standards even though it has done no such thing.
• D) All of these.
• E) None of these.

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Definitions:

APT Model

Arbitrage Pricing Theory Model, an alternative to the Capital Asset Pricing Model (CAPM), asserts that the expected return of a financial asset can be modeled as a linear function of various macro-economic factors or theoretical market indexes.

Security Returns

The gains or losses from investing in a security, usually expressed as a percentage of the initial investment.

Arbitrage Opportunities

Situations where a financial instrument, or a combination of financial instruments, can be bought and sold simultaneously in different markets to profit from price discrepancies.