A financial analyst wants to compare the turnover rates, for shares of oil-related stocks versus other stocks, such as GE and IBM. She selected 45 oil-related stocks and 49 other stocks. The mean turnover rate of oil-related stocks is 34.1 percent and the standard deviation 4.00 percent. For the other stocks, the mean rate was computed to be 31.9 percent and the standard deviation 6.00 percent. Is there a significant difference in the turnover rates of the two types of stock? Use the 0.01 significance level. Question: Write the hypothesis and the Decision Rule used for this Test. Your answer should be complete, but without drawing.
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
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