I the Student T Distribution Has a Greater Spread Than

question 119

Multiple Choice

i. The Student t distribution has a greater spread than does the z distribution. As a result, the critical values of t for a given level of significance are larger in magnitude than the corresponding z critical values. ii. The test statistic t has n-1 degrees of freedom.
iii. William S. Gosset, a brewmaster, developed the t test for the Guinness Brewery in Ireland, who published it in 1908 using the pen name "Student."

• A) (i), (ii), and (iii) are all correct statements.
• B) (iii) is a correct statement but not (i) or (ii).
• C) (i) and,(iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) (i), (ii), and (iii) are all false statements.

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Definitions:

Fundamental Risk

Risk that even if an asset is mispriced, there is still no arbitrage opportunity because the mispricing can widen before the price eventually converges to intrinsic value.

Implementation Costs

Refers to the expenses involved in putting a business plan or project into action, including technology, manpower, training, and other related costs.

Updating Beliefs

The process of adjusting one's expectations or predictions based on new evidence or information.

Conservatism

In accounting, it is the principle of recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but only recognizing revenues when they are assured of being received.