companies ntal records, and companies with poor labor practices. Some America, and Home Depot. The question is, are such stocks overpriced? One measure of value is the P/E, or price-to-earnings ratio. High P/E ratios may indicate a stock is overpriced. For the S&P Stock Index of all major stocks, the mean P/E ratio is u- 19.4. A sample of 36 "socially conscious" stocks gave a P/E ratio sample mean of x 17.8, with sample standard deviation s- 5.6. Does this indicate that the mean P/E ratio of all socially conscious stocks is different (either way) from the mean P/E ratio of the S&P Stock conscious investors screen out stock aiconol and tobacco akers, fim ith poor envi amples of good, socialy c and Jonnson, Dell index? Use a = 0.05. A USE SALT (a) What is the level of significance? State the null and alternate hypotheses. O Ho: H- 19.4; H: H < 19.4 O Ho: H- 19.4; H: H= 19.4 O Hoi 4- 19.4; H: H > 19.4 O Ho: H > 19.4; H: 4- 19.4 Ο 1: μ 19.4 ; Η μ. 19.4 (b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution. O The standard normal, since the sample size is large and o is known.
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
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