The IMF is an international organization of 189-member countriesthat, among other things, looks to assist nations that can’t paytheir international debt obligations.

Assume that a financial analyst for the IMF was reading thestudy “Analysis and Modeling of Recent Business Failures inGreece,” in Managerial and Decisions Economics (1992). In thisstudy, the authors compared various characteristics of firms thatfailed against firms that succeeded. One of the variables studiedwas the Current Ratio of firms. This is a measure of liquidity thatmeasures the ratio of Current Assets to Current Liabilities.Generally speaking, the Current Ratio of a company is roughly theamount a firm is worth divided by what it owes. For a sample of 68firms that succeeded, the average Current Ratio was 1.73 with astandard deviation of .64. For a sample of 33 firms that failed,the average Current Ratio was .82 with a standard deviation of .48.At the 5% level of significance, test the hypothesis that theCurrent Ratio of successful firms is significantly greater thanthat of unsuccessful firms.

A. since the t-score of 7.2 is greater than the critical t-scoreof 1.66, we reject the null hypothesis that the current ratio ofsuccessful firms is less than or equal to that of unsuccessfulfirms. There is some evidence to suggest that the current ratio ofsuccessful firms might be greater than that of unsuccessfulfirms.

B. since the t-score of 7.2 is greater than the critical t-scoreof 1.66, we cannot reject the null hypothesis that the currentratio of successful firms is less than or equal to that ofunsuccessful firms. There is some evidence to suggest that thecurrent ratio of successful firms might be greater than that ofunsuccessful firms.

C. since the t-score of 7.2 is greater than the critical t-scoreof 1.66, we reject the null hypothesis that the current ratio ofsuccessful firms greater than or equal to that of unsuccessfulfirms. There is some evidence to suggest that the current ratio ofsuccessful firms might be less than that of unsuccessful firms.

D. since the t-score of 7.2 is greater than the critical t-scoreof 1.66, we cannot reject the null hypothesis that the currentratio of successful firms is greater or equal to that ofunsuccessful firms. There is some evidence to suggest that thecurrent ratio of successful firms might be greater than that ofunsuccessful firms.
e, none of these answers arecorrect