An Analyst Conducts a Hypothesis Test to Check Whether the Mean

question 51

Multiple Choice

An analyst conducts a hypothesis test to check whether the mean return for a particular fund differs from 10%.He assumes that returns are normally distributed and sets up the following competing hypotheses: Over the past 10 years the fund has had an average annual return of 13.4% with a standard deviation of 2.6%.The value of the test statistic is 4.14 and the critical values at the 5% significance level are -2.262 and 2.262.The correct decision is to __________.

• A)Reject H₀;we can conclude that the mean differs from 10%
• B)Reject H₀;we cannot conclude that the mean differs from 10%
• C)Do not reject H₀;we can conclude that the mean differs from 10%
• D)Do not reject H₀;we cannot conclude that the mean differs from 10%

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Definitions:

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by its shareholders' equity.

Debt-to-equity Ratio

This ratio showcases the relative amounts of debt and shareholders' equity employed to support a company's asset investments.

Times Interest Earned Ratio

A financial ratio measuring a company's ability to meet its interest obligations based on current earnings, indicating financial stability.

Net Profit Margin Percentage

A financial metric that shows the percentage of profit a company makes for every dollar of sales, calculated by dividing net profit by total revenue.