After Computing a Confidence Interval, the Investigator Believes That the Results

question 42

Multiple Choice

After computing a confidence interval, the investigator believes that the results are meaningless because the width of the interval is too large. In reconstructing the interval, the investigator should

• A) decrease the sample size
• B) increase the level of confidence
• C) increase the sample size
• D) reduce the population variance
• E) decrease the sample size and increase the level of confidence

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Definitions:

Future Dividends

Expected payments made by a corporation to its shareholders out of its future earnings.

Risk Premium

The extra return expected for taking on additional risk, over and above the risk-free rate of return.

Firm's Risk

The total risk associated with running a business, including both systematic and unsystematic risks.

Market Risk

The risk of losses in investments due to market variables such as price changes, interest rates, or currency exchange rates.