What Outcome Is Likely to Occur for a Hypothesis Test

question 42

Multiple Choice

What outcome is likely to occur for a hypothesis test evaluating a treatment that has a very large and robust effect?

• A) A Type I error
• B) A Type II error
• C) Correctly rejecting the null hypothesis
• D) Correctly increasing variance

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Definitions:

Fama And French

Fama and French are economists Eugene Fama and Kenneth French, known for their work on asset pricing models, including the three-factor model that considers market, size, and value factors in portfolio returns.

Regression Coefficient

A number that represents the relationship between a dependent variable and an independent variable in statistical models, indicating the strength and direction of the correlation.

Single Factor Model

A financial model that describes an asset's returns as dependent on a single market index or factor.

Fama-French Three Factor Model

The Fama-French Three Factor Model expands on the Capital Asset Pricing Model by incorporating three factors: market risk, size risk, and value risk, to explain stock returns.