When the Annual Rate of Return on Canadian Treasury Bills

question 22

Multiple Choice

When the annual rate of return on Canadian Treasury bills is historically high, investors expect the risk premium on the stock market to be:

• A)considerably lower than normal.
• B)considerably higher than normal.
• C)approximately normal.
• D)approximately equal to zero.

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Definitions:

Confidence Interval

A statistical range, with a certain probability, that is believed to contain the true value of an unknown parameter.

Random Variable

A variable whose values depend on the outcomes of a random phenomenon.

Sample Proportion

The ratio of members in a sample that have a particular characteristic to the total number of members in that sample, often used in statistics to estimate population proportions.

Confidence Coefficient

A value, typically close to 1, that specifies the likelihood that a confidence interval will contain the true population parameter.