A Statistics Professor Works Tirelessly to Catch Students Cheating on His

question 110

Multiple Choice

A statistics professor works tirelessly to catch students cheating on his exams. He has particular routes for his teaching assistants to patrol, an elevated chair to ensure an unobstructed view of all students, and even a video recording of the exam in case additional evidence needs to be collected. He estimates that he catches 95% of students who cheat in his class, but 1% of the time that he accuses a student of cheating he is actually incorrect. Consider the null hypothesis, "the student is not cheating." What is the probability of a Type I error?

• A) 1%
• B) 5%
• C) 95%
• D) 99%

Recognize the role of systematic risk, market risk premium, and risk-free rate in estimating expected returns using the Security Market Line.

Comprehend the effects of taxes on the cost of debt and WACC.

Identify the variables that influence a firm's Weighted Average Cost of Capital (WACC).

Understand the importance of project risk assessment beyond the use of WACC as a cutoff rate.

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Definitions:

Personal Self-Efficacy

Refers to an individual's belief in their own capacity to execute behaviors necessary to produce specific performance attainments.

Facebook

A widely-used social networking platform that allows users to connect, share, and communicate with friends and family online.

Modeling

The process of learning behaviors, attitudes, or emotional reactions through observing others.

Repeating Behavior

Engaging in the same actions or reactions multiple times, often compulsively or habitually, as a way of coping with stress or achieving desired outcomes.