A Hypothesis Test That Rho Is Zero Is Conducted at the 5

question 126

Multiple Choice

A hypothesis test that rho is zero is conducted at the 5% level of significance. If Spearman's (rho) is 0.50 for a sample of 15 observations, what is the critical value?

• A) \(\pm\)2.160
• B) \(\pm\)2.131
• C) \(\pm\)1.771
• D) \(\pm\)1.753

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Definitions:

Constant Growth DDM

A valuation model for stocks that assumes dividends grow at a constant rate in perpetuity, used to calculate the present value of future dividend payments.

Intrinsic Value

The true, inherent, or fundamental value of an asset, based on both tangible and intangible factors, as opposed to its market price.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.

Book Value

The net worth of common equity according to a firm’s balance sheet.