Elwin Osbourne, CIO at GFS, Inc

question 59

Multiple Choice

Elwin Osbourne, CIO at GFS, Inc., suspects that at least 25% of email messages sent by GFS employees are not business related.A random sample of 300 email messages was selected to test this hypothesis at the 0.01 level of significance.Fifty-four of the messages were not business related.The appropriate decision is __.

• A)increase the sample size
• B)gather more data
• C)reject the null hypothesis
• D)do not reject the null hypothesis
• E)maintain status quo

---

Definitions:

Market Risk Premium

The extra return over the risk-free rate that investors require to compensate them for the risk of investing in the stock market.

Risk-free Rate

The return on an investment with no risk of financial loss, often associated with government bonds.

Required Return

The minimum expected yield by investors for providing capital to a company or project.

Betas

A measure of the volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole, often used in the Capital Asset Pricing Model.