Which of the Following Best Describes the Goal of Estimation

question 11

Multiple Choice

Which of the following best describes the goal of estimation?

• A)to determine the extent to which a result is significant
• B)to estimate the significance of a result
• C)to narrow in on the true population mean by defining limits within which it is likely to be contained
• D)both A and B

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Definitions:

Financial Risk

The risk added by the use of debt financing. Debt financing increases the variability of earnings before taxes (but after interest); thus, along with business risk, it contributes to the uncertainty of net income and earnings per share. Business risk plus financial risk equals total corporate risk.

Market Risk

The possibility for an investor to experience losses due to factors that affect the overall performance of the financial markets.

Diversifiable Risk

The portion of investment risk that can be reduced or eliminated through diversification among different assets.

Financial Leverage

Utilizing debt to finance additional assets, aiming to increase returns to shareholders but also increasing risk.