standard deviations-5.8. Does this indicate that the mean P/E ratio of all socially conscious stocks is different (ether way) from the mean P/E ratio of the S&P Stock Index? Use a 0.05. LA USE SALT What is the level of significance? State the null and alternate hypotheses OM 19.4 M₁19.4 OH194 M-19.4 194₂ 194 ₂19.4 M₁19.4 OM 19.4; M₁19.4 (b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution O The Student's t, since the sample size is large and is unknown, The standard normal, since the sample size is large and is known O The Student's , since the sample size is large and a is known The standard normal, since the sample size is large and is unknown What is the value of the sample test statistic? (Round your answer to three decimal places) () Estimate the value value> 0.250 001000.250 O 0.050<< 0.100 00010Palue 0.050 OP<0.010 Sketch the sampling distribution and show the area corresponding to the P-value ^ ^ (6) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level a At the 0.05 level, we reject the null hypothesis and conclude the data are statistically significant At the 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant At the At the-0.05 level, we fail to reject the null hypothesis 0.05 level, we fait to reject the nut hypothesis and conclude the data are statistically significant conclude the data are not statistically significant (4) Interpret your conclusion in the context of the application There is sufficient evidence at the 0.05 level to conclude that the mean P/E ratio of all socially conscious stocks differs from the mean P/E ratio of the S&P Stock Index.

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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 ? = 19.4. A random sample of 36 "socially conscious" stocks gave a P/E ratio sample mean of x = 17.9, with sample standard deviation s = 5.8. 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? Use ? = 0.05.

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 mai
standard deviations 5.8. 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? Use a = 0.05.
LAUSE SALT
(a) What is the level of significance?
-
State the null and alternate hypotheses.
OHM 19.4; H₁: 19.4
OH:19.4; H₁: M-19.4
OH:19.4; H₁ 19.4
ọ Hoian 19,4, Hội 19,4
o Hon - 19,4; Hil 19,4
(b) What sampling distribution will you use? Explain
O The Student's t, since the sample size is large and is unknown.
O The standard normal, since the sample size is large and is known.
O The Student's t, since the sample size is large and e is known.
O The standard normal, since the sample size is large and is unknown.
What is the value of the sample test statistic? (Round your answer to three decimal places.)
(c) Estimate the P-value.
OP-value> 0.250
rationale for your choice of sampling distribution.
O 0.100 < P-value < 0.250
O 0.050 < P-value < 0.100
O 0.010 < P-value < 0.050
OP-value < 0.010
Sketch the sampling distribution and show the area corresponding to the P-value.
^ ^
(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level a?
At the a= 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.
O At the a= 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.
O At the a= 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.
O At the a= 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.
(e) Interpret your conclusion in the context of the application.
O There is sufficient evidence at the 0.05 level to conclude that the mean P/E ratio of all socially conscious stocks differs from the mean P/E ratio of the S&P Stock Index.
O There is insufficient evidence at the 0.05 level to conclude that the mean P/E ratio of all socially conscious stocks differs 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 mai standard deviations 5.8. 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? Use a = 0.05. LAUSE SALT (a) What is the level of significance? - State the null and alternate hypotheses. OHM 19.4; H₁: 19.4 OH:19.4; H₁: M-19.4 OH:19.4; H₁ 19.4 ọ Hoian 19,4, Hội 19,4 o Hon - 19,4; Hil 19,4 (b) What sampling distribution will you use? Explain O The Student's t, since the sample size is large and is unknown. O The standard normal, since the sample size is large and is known. O The Student's t, since the sample size is large and e is known. O The standard normal, since the sample size is large and is unknown. What is the value of the sample test statistic? (Round your answer to three decimal places.) (c) Estimate the P-value. OP-value> 0.250 rationale for your choice of sampling distribution. O 0.100 < P-value < 0.250 O 0.050 < P-value < 0.100 O 0.010 < P-value < 0.050 OP-value < 0.010 Sketch the sampling distribution and show the area corresponding to the P-value. ^ ^ (d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level a? At the a= 0.05 level, we reject the null hypothesis and conclude the data are statistically significant. O At the a= 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant. O At the a= 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant. O At the a= 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant. (e) Interpret your conclusion in the context of the application. O There is sufficient evidence at the 0.05 level to conclude that the mean P/E ratio of all socially conscious stocks differs from the mean P/E ratio of the S&P Stock Index. O There is insufficient evidence at the 0.05 level to conclude that the mean P/E ratio of all socially conscious stocks differs from the mean P/E ratio of the S&P Stock Index.
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