---### Analyzing the Price to Earnings Ratio (P/E) for Large U.S. BanksThe price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks (e.g., JP Morgan, Bank of America, and others) produced the following P/E ratios:\[ \text{Where the ratios are as follows:} \]\[ 24 \quad 26 \quad 14 \quad 23 \quad 17 \quad 22 \quad 15 \quad 19 \quad 23 \quad 13 \quad 11 \quad 18 \]The sample mean is \(\bar{x} = 17\). Generally, 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 \(\mu = 18\). Let \(x\) be a random variable representing the P/E ratio of all large U.S. bank stocks. We assume \(x\) is normally distributed with \(\sigma = 3.7\). Do these data indicate that the P/E ratio of all large U.S. bank stocks is less than 18? Use \(\alpha = 0.01\).#### Part I: What is the level of significance?Identify the null and alternate hypotheses. Will this be a left-tailed, right-tailed, or two-tailed test?- \(H_0: \mu = 18\); \(H_1: \mu < 18\); left-tailed- \(H_0: \mu = 18\); \(H_1: \mu > 18\); right-tailed- \(H_0: \mu = 18\); \(H_1: \mu \neq 18\); two-tailed#### Part II**(b) What sampling distribution will you use?** Provide the rationale for your choice:- The standard normal, since we assume a normal distribution with unknown \(\sigma\).- The standard normal, since we assume \(x\) has a normal distribution with known \(\sigma\).- The Student’s \(t\), since \(x\) is assumed known with \(\sigma\).- The Student’s \(t\), since we assume a normal distribution with known \(\sigma\).**Calculate

From the given sample data : n=14 , , ƩX= 239 Now , the sample mean is , X¯=∑Xn=23914=17.0714 Also…

A large U.S. barks ( 24 U 22 14 12 13 17 22 15 19 23 13 18 The sample mean 17.1. Generally speaking, a low PE ratie indicates a "value or barpain stock. Suppose a recent cepy of a magazine indicated that the PE ratio ofa certain steck index is . Letbe a randem variable representing the yE ratie of al large US. bank stocks. We anormal distribution ande3.7. De these data indicate that the PE ratie of all US. bank stocks is less than (OWhat is the level of significance State the nul and alternate hypotheses. W you use a let-taled, right-taled, or two tailed test OM , t taled OM 18, H, 18, len-taled

A large U.S. barks ( 24 U 22 14 12 13 17 22 15 19 23 13 18 The sample mean 17.1. Generally speaking, a low PE ratie indicates a "value or barpain stock. Suppose a recent cepy of a magazine indicated that the PE ratio ofa certain steck index is . Letbe a randem variable representing the yE ratie of al large US. bank stocks. We anormal distribution ande3.7. De these data indicate that the PE ratie of all US. bank stocks is less than (OWhat is the level of significance State the nul and alternate hypotheses. W you use a let-taled, right-taled, or two tailed test OM , t taled OM 18, H, 18, len-taled

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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