A) What is a null and alternative hypothesis? (2 marks) b) What does the level of significance tell you? (1 marks)
c) How can you identify a two-tailed test? (1 marks)
d) Briefly explain the difference between a two-tailed and a one-tailed test
(2 marks)
e) Briefly explain when the z-distribution and t-distribution are used to
perform a test of hypothesis (2 marks)
f) There are two types of errors that can occur in hypothesis testing,
identify the two types of errors (2 marks)

The east asiatic company (eac), a danish company with subsidiaries throughout asia, has been funding its bangkok subsidiary primarily with u.s. dollar debt because of the cost and availability of dollar capital as opposed to thai baht-denominated (b) debt. the treasurer of eac-thailand is considering a 1-year bank loan for $247,000.the current spot rate is b32.03 /$, and the dollar-based interest is 6.78% for the 1-year period. 1-year loans are 12.04% in baht.a. assuming expected inflation rates of 4.3 % and 1.24% in thailand and the united states, respectively, for the coming year, according to purchase power parity, what would the effective cost of funds be in thai baht terms? b. if eac's foreign exchange advisers believe strongly that the thai government wants to push the value of the baht down against the dollar by5% over the coming year (to promote its export competitiveness in dollar markets), what might the effective cost of funds end up being in baht terms? c. if eac could borrow thai baht at 13% per annum, would this be cheaper than either part (a) or part (b) above?