What Is the Relationship Between Statistical Significance and Practical Significance

question 39

Multiple Choice

What is the relationship between statistical significance and practical significance?

• A) Statistical significance does not equal practical significance.
• B) If an outcome is statistically significant,this means that it has practical significance.
• C) If an outcome is practical significance,this means that it has statistical significance.
• D) Statistical significance and practical significance are really the same thing.

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Definitions:

Yield Curve

A graph that shows the relationship between the interest rates and the maturity dates of debt securities issued by the same issuer.

Liquidity Premiums

Additional yield that investors require to hold securities with lower liquidity, compensating them for the higher cost and difficulty of trading such securities.

Future Expected Short Rates

The anticipated interest rates for short-term debt instruments in the future, important for forecasting and investment strategies.

Forward Rate

An agreed-upon interest rate for a financial transaction that will occur in the future, used in forward contracts and rate agreements.