A Firm That Expects to Borrow in the Future Would

question 28

True/False

A firm that expects to borrow in the future would use a short hedge to protect against interest rate changes.

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Definitions:

Null Hypothesis

The default hypothesis that there is no effect or no difference, and any observed effect is due to sampling variability.

Type I Error

The probability of rejecting the null hypothesis when it is actually true, also known as a false positive.

Type II Error

A statistical mistake of failing to reject a false null hypothesis; also known as a false negative.