If she is willing to accept a probability of Type I error of 0.05, should she buy the stock? Motivate your answer. O p-value=D0.000<0.05=0 + Reject Ho: She should buy the stock O p-value=0.292>0.05=a Fail to reject Ho: She should NOT buy the stock O p-value=0.011<0.05%=XReject Ho: She should buy the stock O p-value=D0.146>0.05%3aFail to reject Ho: She should NOT buy the stock
If she is willing to accept a probability of Type I error of 0.05, should she buy the stock? Motivate your answer. O p-value=D0.000<0.05=0 + Reject Ho: She should buy the stock O p-value=0.292>0.05=a Fail to reject Ho: She should NOT buy the stock O p-value=0.011<0.05%=XReject Ho: She should buy the stock O p-value=D0.146>0.05%3aFail to reject Ho: She should NOT buy the stock
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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![QUESTION 11
Ar An investor becomes interested in the stock of ABC Corp through a television program. She is a conservative investor (and statistician), and marked by
previous experience, she wants to make sure the volatility in her stock investments is sufficiently low. As a personal guideline, she has established the
rule to only invest in stocks where the population standard deviation of the daily price changes is less than 1[%]. Daily price changes of stocks are well
modeled as independent random variables with a nomal distribution.
To determine if the stock of ABC Corp meets her guideline, she collects daily prices for the preceding quarter, with the following results:
Days
Sample Mean
Sample Standard Deviation
Daily Price Change
61
0.05[%]
0.9[%]
If she is willing to accept a probability of Type l error of 0.05, should she buy the stock? Motivate your answer.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffd54fbc2-091c-4efc-a0ae-33f00779b90d%2F477f610f-1ceb-46cc-8159-8a489f56453f%2F4q8tza_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION 11
Ar An investor becomes interested in the stock of ABC Corp through a television program. She is a conservative investor (and statistician), and marked by
previous experience, she wants to make sure the volatility in her stock investments is sufficiently low. As a personal guideline, she has established the
rule to only invest in stocks where the population standard deviation of the daily price changes is less than 1[%]. Daily price changes of stocks are well
modeled as independent random variables with a nomal distribution.
To determine if the stock of ABC Corp meets her guideline, she collects daily prices for the preceding quarter, with the following results:
Days
Sample Mean
Sample Standard Deviation
Daily Price Change
61
0.05[%]
0.9[%]
If she is willing to accept a probability of Type l error of 0.05, should she buy the stock? Motivate your answer.
![Days
Sample Mean
Sample
61
0.05[%]
0.91%
Daily Price Change
If she is willing to accept a probability of Type I error of 0.05, should she buy the stock? Motivate your answer.
O p-value3D0.000<0.05%30→ Reject Ho: She should buy the stock
O p-value=D0.292>0.05=a Fail to reject Ho: She should NOT buy the stock
O p-value=0.011<0.05-a Reject Ho She should buy the stock
O p-value=0.146>0.05%3Da Fail to reject Ho: She should NOT buy the stock](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffd54fbc2-091c-4efc-a0ae-33f00779b90d%2F477f610f-1ceb-46cc-8159-8a489f56453f%2F51rdz1x_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Days
Sample Mean
Sample
61
0.05[%]
0.91%
Daily Price Change
If she is willing to accept a probability of Type I error of 0.05, should she buy the stock? Motivate your answer.
O p-value3D0.000<0.05%30→ Reject Ho: She should buy the stock
O p-value=D0.292>0.05=a Fail to reject Ho: She should NOT buy the stock
O p-value=0.011<0.05-a Reject Ho She should buy the stock
O p-value=0.146>0.05%3Da Fail to reject Ho: She should NOT buy the stock
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