A Fund Manager Wants to Know If It Is Equally

question 27

Multiple Choice

A fund manager wants to know if it is equally likely that the Dow Jones Industrial Average will go up each day of the week. For each day of the week, the fund manager observes the following number of days when the Dow Jones Industrial Average goes up. Using the critical value approach, the decision and conclusion are

• A) reject the null hypothesis; not all of the proportions are the same
• B) reject the null hypothesis; all of the proportions are not the same
• C) do not reject the null hypothesis; all of the proportions are the same
• D) do not reject the null hypothesis; we cannot conclude that not all of the proportions are the same

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the percentage of fixed versus variable costs a company has.

Variable Costs

Expenses that change in proportion to the level of production or sales activity.

Composite Units

A measure used in accounting to bundle goods or services together for the purposes of inventory management, costing, or sales analysis.

Fixed Costs

Costs that remain constant regardless of a business's operational levels, like lease payments, wages, and coverage fees.