A Standardized Test Is Known to Be Normally Distributed with the Mean

question 52

Multiple Choice

A standardized test is known to be Normally distributed with the mean of 500 and the standard deviation of 100. How large a sample would be needed if the standard deviation of sample means is 14?

• A) 30
• B) 42
• C) 51
• D) 82

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Definitions:

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, a crucial part of capital budgeting and often calculated using models like CAPM.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. It represents the average rate that a company is expected to pay to finance its assets.

Cost of Debt

The effective rate that a company pays on its borrowed funds from financial institutions and other sources.

Tax Effects

The impact of taxation on the financial decisions and outcomes of individuals and businesses, including tax liabilities, benefits, and incentives.