The Level of Significance Can Be

question 133

Multiple Choice

The level of significance can be:

• A)any number between −1.0 and 1.0.
• B)any number greater than zero.
• C)any number greater than 1.96 or less than −1.96.
• D)None of these choices.

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Definitions:

Required Rate

The minimum return an investor expects to achieve when investing in a particular asset or project.

Payback Period

The duration of time it takes for an investment to generate enough revenue to recover the initial cost of the investment.

Profitability Index

A measure used in capital budgeting to evaluate the profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.