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Socially conscious investors screen out stocks of alcohol and tobacco makers, firms with poor environmental records, and companies with poor labor practices. Some examples of "good," socially conscious companies are Johnson and Johnson, Dell Computers, Bank of 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 μ = 19.4. A random sample of 31 "socially conscious" stocks gave a P/E ratio sample mean of x = 18.3, with sample standard deviation s = 4.2. At a 10% level of significance 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 Index? What distribution will be used for this test? Student's t Is this test right-tailed, left-tailed, or two-tailed? two-tailed Using the critical region method which curve represents this test: c (b) H₁: μ>k Right-tailed (c) H₂: k Two-tailed (a) H₁:

Socially conscious investors screen out stocks of alcohol and tobacco makers, firms with poor environmental records, and companies with poor labor practices. Some examples of "good," socially conscious companies are Johnson and Johnson, Dell Computers, Bank of 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 μ = 19.4. A random sample of 31 "socially conscious" stocks gave a P/E ratio sample mean of x = 18.3, with sample standard deviation s = 4.2. At a 10% level of significance 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 Index? What distribution will be used for this test? Student's t Is this test right-tailed, left-tailed, or two-tailed? two-tailed Using the critical region method which curve represents this test: c (b) H₁: μ>k Right-tailed (c) H₂: k Two-tailed (a) H₁:

MATLAB: An Introduction with Applications
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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Socially conscious investors screen out stocks of alcohol and tobacco makers, firms with poor environmental records, and companies with poor labor practices. Some examples of "good," socially conscious companies are Johnson and Johnson, Dell Computers, Bank of 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 random sample of 31 "socially conscious" stocks gave a P/E ratio sample mean of x 18.3, with sample standard deviation s = 4.2. At a 10% level of significance 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 Index? = = What distribution will be used for this test? Student's t Is this test right-tailed, left-tailed, or two-tailed? two-tailed Using the critical region method which curve represents this test: c (c) H₁: k (b) Η: μ > Κ Right-tailed Two-tailed (a) H₁: <k Left-tailed Area = a k Critical region What is the critical value for this test? k Area Calculate the sample test statistic: Will you reject or fail to reject the null hypothesis? State your conclusion by filling in the blanks: At α Critical region Area = a/2 k Critical regions (three decimal places) Area = a/2 % level of significance, (reject or fail to reject) the null hypothesis. There is (sufficient or insufficient) evidence to say that the mean P/E ratio of all socially conscious stocks is different from the mean P/E ratio of the S&P Stock Index.
Transcribed Image Text:Socially conscious investors screen out stocks of alcohol and tobacco makers, firms with poor environmental records, and companies with poor labor practices. Some examples of "good," socially conscious companies are Johnson and Johnson, Dell Computers, Bank of 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 random sample of 31 "socially conscious" stocks gave a P/E ratio sample mean of x 18.3, with sample standard deviation s = 4.2. At a 10% level of significance 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 Index? = = What distribution will be used for this test? Student's t Is this test right-tailed, left-tailed, or two-tailed? two-tailed Using the critical region method which curve represents this test: c (c) H₁: k (b) Η: μ > Κ Right-tailed Two-tailed (a) H₁: <k Left-tailed Area = a k Critical region What is the critical value for this test? k Area Calculate the sample test statistic: Will you reject or fail to reject the null hypothesis? State your conclusion by filling in the blanks: At α Critical region Area = a/2 k Critical regions (three decimal places) Area = a/2 % level of significance, (reject or fail to reject) the null hypothesis. There is (sufficient or insufficient) evidence to say that the mean P/E ratio of all socially conscious stocks is different from the mean P/E ratio of the S&P Stock Index.
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