Private sector managing directors are of the opinion that 50% of the corporate, government, and accounting executives of the Financial Accounting Foundation rate a company’s cash flow as the most important indicator of a company’s financial health. A survey of 415 corporate, government, and accounting executives of the Financial Accounting Foundation found that 278 rated cash flow as the most important indicator of a company’s financial health. Assume that the 415 executives constitute a random sample from the population of all executives. The questions follow on the next page.
Private sector managing directors are of the opinion that 50% of the corporate, government, and accounting executives of the Financial Accounting Foundation rate a company’s cash flow as the most important indicator of a company’s financial health. A survey of 415 corporate, government, and accounting executives of the Financial Accounting Foundation found that 278 rated cash flow as the most important indicator of a company’s financial health. Assume that the 415 executives constitute a random sample from the population of all executives. The questions follow on the next page.
1. Is there sufficient evidence to indicate that the proportion of executives that rate cash flow as the most important indicator of financial health, differs from the opinion of the private sector managing directors? Use a test with level α = 0.05. Interpret your findings.
2.Construct a 95% confidence interval for the proportion of all corporate executives who consider cash flow the most important measure of a company’s financial health. Interpret your result.
3. 3. Do the hypothesis test in (1) and confidence interval in (2) arrive at the same conclusion? Explain why.
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