If Dr Robinson Rejects the Null Hypothesis After Observing a Test

question 26

Multiple Choice

If Dr. Robinson rejects the null hypothesis after observing a test statistic which exceeds the critical value at the .05 level, there is_____________________________________________.

• A) a 95% chance that the null hypothesis is actually true
• B) a 5% chance that the null hypothesis is actually true
• C) a 5% chance that the null hypothesis is actually false
• D) no chance that the null hypothesis is actually true

---

Definitions:

Conservatism

An accounting principle that errs on the side of caution by recording expenses and liabilities as soon as possible but only recognizing revenues and assets when they are assured.

Overreaction

Refers to an excessive emotional response from investors to new information, causing a security's price to move far more than justified by the fundamentals.

Recent Events

Occurrences or developments that have taken place in the near past, potentially impacting markets or specific sectors.

Siamese Twin Companies

Pairs of companies, often resulting from a demerger, whose shares are technically inseparable and therefore trade together on stock exchanges.