You have observed an apparent, yet odd, increase stock prices when companies have spun-off divisions. You have just collected the data on 50 such events. The average beta (market value weighted) is 1.15 for this group.
Definitions:
Significance Level
The probability of rejecting the null hypothesis in a statistical test when it is actually true, commonly denoted by alpha (α) and used to measure the strength of evidence against the null hypothesis.
α
Typically represents the level of significance in hypothesis testing, indicating the probability of rejecting the null hypothesis when it is actually true.
β Recalculate
A statistical process of re-estimating the beta coefficient in finance or regression models, adjusting for changes in variables or data.
Type II Error
A statistical error that occurs when a false null hypothesis is not rejected, meaning a real effect or difference is missed.
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