Confidence Levels Allow the Researcher to Have Some Idea of How

question 11

Multiple Choice

Confidence levels allow the researcher to have some idea of how closely their samples reflect the parameter. Which statement about confidence levels is true?

• A) If a simple random sample is used, probability theory suggests that researchers can be 95 percent sure the estimates of that sample fall within one standard error of the parameter.
• B) If a simple random sample is used, probability theory suggests that researchers can be 68 percent sure that estimates of that sample fall within two standard errors of the parameter.
• C) If a simple random sample is used, probability theory suggests that researchers can almost be positive 99+ percent) that estimates of that sample fall within three standard errors of the true value.
• D) If a simple random sample is used, probability theory suggests that researchers can be positive that sample mean is equivalent to population mean.

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Definitions:

SML

The Security Market Line, a graphical representation of the Capital Asset Pricing Model (CAPM) that displays the expected return of an investment as a function of its systemic risk.

Required Rate Of Return

The minimum percentage return an investor expects to receive from an investment, taking into account its risk.

Portfolio

A collection of investments held by an individual or institution, including stocks, bonds, commodities, and more, aimed at diversifying risk.

Required Return

The minimum expected return on an investment necessary for it to be considered a viable option, taking into account its risk level.