What Happens to the Probability of Committing a Type I

question 10

Multiple Choice

What happens to the probability of committing a Type I error if the level of significance is changed from  = 0.01 to  = 0.05?

• A)The probability of committing a Type I error will decrease.
• B)The probability of committing a Type I error will increase.
• C)The probability of committing a Type I error will remain the same.
• D)The change in probability will depend on your sample size.

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Definitions:

Income Statement

A financial statement that provides a summary of a company's revenues, expenses, and profits/losses over a period of time.

Cash Flow to Stockholders

The amount of cash distributed to stockholders of a company, typically in the form of dividends or through the buyback of shares.

Net New Equity

The amount of money raised by a company through the issuance of new shares, minus any expenses related to the issuance.