You Want to Test the Hypothesis That the Prime Rate

question 66

Multiple Choice

You want to test the hypothesis that the prime rate and inflation are independent.The following table of frequencies is prepared from a random sample,collected in various countries and various time periods: Based on an analysis of the data in this table,which conclusion can be made at α = .01?

• A) The prime rate and inflation rate are independent.
• B) The prime rate and inflation rate are not independent.
• C) Small observed frequencies in some cells suggest that no reliable conclusion can be made.
• D) Small expected frequencies in some cells suggest that no reliable conclusion can be made.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period, which can include payments on loans, bonds, or other forms of debt.

Bond Issued At Premium

A scenario when a bond is sold for more than its face value due to interest rates being lower than the bond's coupon rate.

Journal Entry

A record in accounting that represents a transaction where debits and credits are equal, showing a company's financial transactions.

Stockholders' Equity

Funds contributed by the shareholders plus the company's earnings retained over time, reflecting the ownership value in the firm.