Suppose We Wish to Test H ₀: M = 45

question 135

Multiple Choice

Suppose we wish to test H ₀: m = 45 vs. H ₁: m > 45. What will result if we conclude that the mean is greater than 45 when the actual mean is 50?

• A)We have made a Type I error.
• B)We have made a Type II error.
• C)We have made both a Type I error and a Type II error.
• D)We have made the correct decision.

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Definitions:

Semiannual Interest

Interest that is calculated and paid twice a year, often used in bond and loan agreements.

Discount on Bonds Payable

The difference by which the bond's face value exceeds its selling price, reducing the cost to the issuer.

Straight-Line Method

A method of calculating depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its interest payments on outstanding debt.