The Next Questions Are Based on the Following Information

question 162

Multiple Choice

The Next Questions Are Based On The Following Information:
The dean of a business college in the Midwest claims that he can correctly identify whether a student is a finance major or a music industry management major by the way the student dresses.Suppose in actuality that he can correctly identify finance majors 84% of the time,while 16% of the time he mistakenly identifies a music industry management major as a finance major.Presented with one student and asked to identify the major of this student (who is either a finance or music industry management major) ,the dean considers this to be a hypothesis test with the null hypothesis being that the student is a finance major and the alternative that the student is a music industry management major.
-Which of the following statements illustrates a Type I error?

• A)Saying that the student is a music industry management major when in fact the student is a finance major.
• B)Saying that the student is a finance major when in fact the student is a finance major.
• C)Saying that the student is a finance major when in fact the student is a music industry management major.
• D)Saying that the student is a music industry management major when in fact the student is a music industry management major.

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Definitions:

Book-To-Market Effect

The tendency for securities with high book-to-market ratios to outperform those with low ratios.

Semistrong Form

A theory in the Efficient Market Hypothesis that postulates all publicly available information is already reflected in stock prices, including historical data and new public information.

Efficient Markets Hypothesis

A theory suggesting that financial markets fully reflect all available information, making it impossible to consistently achieve higher returns than the market average.

Publicly Available

Information or data that is not restricted and can be accessed or utilized by the general public.