In a sample of 1702 companies from year 2000, there are 878 companies that pay a stock dividend to its shareholders, there are 1253 companies that pay their CEO's over $1 million in total compensation, and there are 673 firms that pay a dividend and pay their CEO's over $1 million in total compensations. The following table describes this joint distribution. Dividend Not Dividend Total Over $1 Million Not over $1 million Total 673 580 205 878 244 824 1253 449 1702 When testing the hypothesis (using the 1% level of significance) that the compensation of the CEO and whether the company pays a dividend are independent, what is the critical value? (please round your answer to 3 decimal places).

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QUESTION 11
In a sample of 1702 companies from year 2000, there are 878 companies that pay a stock dividend to its
shareholders, there are 1253 companies that pay their CEO's over $1 million in total compensation, and there are
673 firms that pay a dividend and pay their CEO's over $1 million in total compensations. The following table
describes this joint distribution.
Dividend
Not Dividend
Total
Over $1 Million
Not over $1 million
Total
673
205
878
580
244
824
1253
449
1702
When testing the hypothesis (using the 1% level of significance) that the compensation of the CEO and whether
the company pays a dividend are independent, what is the critical value? (please round your answer to 3 decimal
places).
Transcribed Image Text:QUESTION 11 In a sample of 1702 companies from year 2000, there are 878 companies that pay a stock dividend to its shareholders, there are 1253 companies that pay their CEO's over $1 million in total compensation, and there are 673 firms that pay a dividend and pay their CEO's over $1 million in total compensations. The following table describes this joint distribution. Dividend Not Dividend Total Over $1 Million Not over $1 million Total 673 205 878 580 244 824 1253 449 1702 When testing the hypothesis (using the 1% level of significance) that the compensation of the CEO and whether the company pays a dividend are independent, what is the critical value? (please round your answer to 3 decimal places).
Expert Solution
Step 1

Given , Significance level = α = 1% = 0.01

Degrees of freedom (df) = (# of rows - 1 )(# of columns -1 ) = (2-1)(2-1) = 1

We have to find critical value.

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