Answer: H₀ : M ≤ 0.8 versus H₁ : M > 0.8

## Explanation This is a hypothesis testing question about setting up null and alternative hypotheses for a one-sided test. **Key Points:** - Hilda believes the average return on equity is **greater than 80%** (M > 0.8) - This is a **one-sided test** since we're testing specifically for values greater than 80% - The **null hypothesis (H₀)** should represent the status quo or the claim we're testing against - The **alternative hypothesis (H₁)** represents Hilda's belief **Correct Setup:** - **H₀: M ≤ 0.8** (null hypothesis - average return is less than or equal to 80%) - **H₁: M > 0.8** (alternative hypothesis - average return is greater than 80%) **Why Option C is correct:** - The null hypothesis should contain the equality (≤) and represent the opposite of what Hilda believes - The alternative hypothesis should reflect Hilda's specific belief (M > 0.8) - This is a right-tailed test since we're testing if the mean is greater than the hypothesized value **Why other options are incorrect:** - **Option A**: Two-tailed test (≠), not appropriate for directional belief - **Option B**: Tests if mean is less than 80%, opposite of what Hilda believes - **Option D**: Null hypothesis doesn't contain equality, which is standard practice in hypothesis testing

Author: Tanishq Prabhu