The price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks (J. P. Morgan, Bank of America, and others) gave the following P/E ratios.† 24 16 22 14 12 13 17 22 15 19 23 13 11 18 The sample mean is x ≈ 17.1. Generally speaking, a low P/E ratio indicates a "value" or bargain stock. Suppose a recent copy of a magazine indicated that the P/E ratio of a certain stock index is μ = 19. Let x be a random variable representing the P/E ratio of all large U.S. bank stocks. We assume that x has a normal distribution and σ = 4.8. Do these data indicate that the P/E ratio of all U.S. bank stocks is less than 19? Use α = 0.05. (a) What is the level of significance? State the null and alternate hypotheses. Will you use a left-tailed, right-tailed, or two-tailed test? H0: μ = 19; H1: μ > 19; right-tailedH0: μ = 19; H1: μ < 19; left-tailed H0: μ ≠ 19; H1: μ = 19; two-tailedH0: μ = 19; H1: μ ≠ 19; two-tailed (b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution. The Student's t, since n is large with unknown σ.The standard normal, since we assume that x has a normal distribution with unknown σ. The Student's t, since we assume that x has a normal distribution with known σ.The standard normal, since we assume that x has a normal distribution with known σ. Compute the z value of the sample test statistic. (Round your answer to two decimal places.) Your answer cannot be understood or graded. More Information (c) Find (or estimate) the P-value. (Round your answer to four decimal places.) Sketch the sampling distribution and show the area corresponding to the P-value. (d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level α? At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant. At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.
The price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks (J. P. Morgan, Bank of America, and others) gave the following P/E ratios.† 24 16 22 14 12 13 17 22 15 19 23 13 11 18 The sample mean is x ≈ 17.1. Generally speaking, a low P/E ratio indicates a "value" or bargain stock. Suppose a recent copy of a magazine indicated that the P/E ratio of a certain stock index is μ = 19. Let x be a random variable representing the P/E ratio of all large U.S. bank stocks. We assume that x has a normal distribution and σ = 4.8. Do these data indicate that the P/E ratio of all U.S. bank stocks is less than 19? Use α = 0.05. (a) What is the level of significance? State the null and alternate hypotheses. Will you use a left-tailed, right-tailed, or two-tailed test? H0: μ = 19; H1: μ > 19; right-tailedH0: μ = 19; H1: μ < 19; left-tailed H0: μ ≠ 19; H1: μ = 19; two-tailedH0: μ = 19; H1: μ ≠ 19; two-tailed (b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution. The Student's t, since n is large with unknown σ.The standard normal, since we assume that x has a normal distribution with unknown σ. The Student's t, since we assume that x has a normal distribution with known σ.The standard normal, since we assume that x has a normal distribution with known σ. Compute the z value of the sample test statistic. (Round your answer to two decimal places.) Your answer cannot be understood or graded. More Information (c) Find (or estimate) the P-value. (Round your answer to four decimal places.) Sketch the sampling distribution and show the area corresponding to the P-value. (d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level α? At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant. At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.6: Summarizing Categorical Data
Problem 31PPS
Related questions
Question
The price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks (J. P. Morgan, Bank of America, and others) gave the following P/E ratios.†
| 24 | 16 | 22 | 14 | 12 | 13 | 17 | 22 | 15 | 19 | 23 | 13 | 11 | 18 |
The sample mean is
x ≈ 17.1.
Generally speaking, a low P/E ratio indicates a "value" or bargain stock. Suppose a recent copy of a magazine indicated that the P/E ratio of a certain stock index is μ = 19. Let x be a random variable representing the P/E ratio of all large U.S. bank stocks. We assume that x has a
(a) What is the level of significance?
State the null and alternate hypotheses. Will you use a left-tailed, right-tailed, or two-tailed test?
(b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution.
Compute the z value of the sample test statistic. (Round your answer to two decimal places.)
Your answer cannot be understood or graded. More Information
(c) Find (or estimate) the P-value. (Round your answer to four decimal places.)
Sketch the sampling distribution and show the area corresponding to the P-value.
(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level α?
State the null and alternate hypotheses. Will you use a left-tailed, right-tailed, or two-tailed test?
H0: μ = 19; H1: μ > 19; right-tailedH0: μ = 19; H1: μ < 19; left-tailed H0: μ ≠ 19; H1: μ = 19; two-tailedH0: μ = 19; H1: μ ≠ 19; two-tailed
(b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution.
The Student's t, since n is large with unknown σ.The standard normal, since we assume that x has a normal distribution with unknown σ. The Student's t, since we assume that x has a normal distribution with known σ.The standard normal, since we assume that x has a normal distribution with known σ.
Compute the z value of the sample test statistic. (Round your answer to two decimal places.)
Your answer cannot be understood or graded. More Information
(c) Find (or estimate) the P-value. (Round your answer to four decimal places.)
Sketch the sampling distribution and show the area corresponding to the P-value.
(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level α?
At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant. At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill