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Beta Risk Definition
It is defined as the probability that a false null hypothesis will be accepted by a statistical test which is also known as a Type II error. The primary determinant of the beta risk is the sample size that is used for the test and larger the sample tested, then the beta risk becomes low.
It is the risk where the decision will be made that the part is not defective when it really is and in other words when the decision is made that a difference does not exist when there actually is.
Beta Risk Assignment Help
If the power desired is 90%, then the Beta risk is 10% that is there is a 10% chance that the decision will be made that the part is not defective when in reality it is defective. In beta risk the decision is made that a difference does not exist when there actually is and the power of a test is expressed as follows:
Power of a test = 1 - Beta
A beta error is also called False Negative and Type II Error and the Power is the probability of correctly rejecting the Null Hypothesis where the Null Hypothesis is technically never proven true as it is "failed to reject" or "rejected". "Failed to reject" does not mean accept the null hypothesis. It is only established to be proven false by testing the sample of data.
Beta Risk Homework Help
Beta is a measure of a stock's volatility in relation to the market and by definition, the market has a beta risk of 1.0, and individual stocks are ranked according to how much they deviate from the market. If the stock that moves more than the market, then it has a beta risk which is above 1.0 and if a stock moves less than the market, the stock's beta risk is less than 1.0. High-beta stocks are considered to be riskier but provide a potential for higher returns and the low-beta stocks pose less risk and also lower returns.
An interesting application of hypothesis testing in finance can be done using the Altman Z-score where the Z-score is a statistical model meant to predict the future bankruptcy of firms based on certain financial indicators. Statistical tests about the accuracy of the Z-Score have indicated relatively high accuracy and predicting bankruptcy within one year as these tests showed a beta risk ranging from approximately 15 to 20%, depending on the sample being tested.
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