If a Test of Hypothesis Has a Type I Error

question 24

Multiple Choice

If a test of hypothesis has a Type I error probability of .05,this means that:

• A)if the null hypothesis is true,we don't reject if 5% of the time.
• B)if the null hypothesis is true,we reject it 5% of the time.
• C)if the null hypothesis is false,we don't reject it 5% of the time.
• D)if the null hypothesis is false,we reject it 5% of the time.

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Definitions:

Interest Rate

The fraction of a monetary amount imposed for its borrowing, often stated in terms of an annual percentage rate.

Investment

The allocation of resources, often financial, into a venture or asset, with the expectation of generating income or profit.

Expected Rate of Return

The return an investor anticipates receiving from an investment, considering all possible outcomes or the performance of the asset over time.

Interest Rate

The rate at which a loan accumulates interest for the borrower, typically denoted as an annual percentage of the loan's still-to-be-repaid amount.