If You Wanted to Test, Using a 5% Significance Level

question 38

Multiple Choice

If you wanted to test, using a 5% significance level, whether or not a specific slope coefficient is equal to one, then you should

• A)subtract 1 from the estimated coefficient, divide the difference by the standard error, and check if the resulting ratio is larger than 1.96.
• B)add and subtract 1.96 from the slope and check if that interval includes 1.
• C)see if the slope coefficient is between 0.95 and 1.05.
• D)check if the adjusted R² is close to 1.

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Definitions:

Additional Shares

Newly issued stock by a company, which increases the total number of shares outstanding and dilutes the ownership percentage of existing shareholders.

Discounted Price

A reduced price from the original selling price, often used to stimulate sales or clear inventory.

Tax-exempt Investor

An individual or entity that is not required to pay taxes on certain income or investments.

High Dividend Payout

A high dividend payout refers to a situation where a company distributes a significant portion of its profits to shareholders in the form of dividends, often indicating a mature company with limited reinvestment opportunities.