webassign.net The price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks (J. P. Morgan, Bank of America, and others) gave the following P/E ratios.t 24 16 22 14 12 13 17 22 15 19 23 13 11 18 The sample mean is 17.1. Generally speaking, a low P/E ratio indicates a "value" or bargain stock. Suppose a recent copy of a magazine indicated that the P/E ratio of a certain stock index is µ = 20. Let x be a random variable representing the P/E ratio of all large U.S. bank stocks. We assume that x has a normal distribution and o = 5.5. Do these data indicate that the P/E ratio of all U.S. bank stocks is less than 20? Use a = 0.01. (a) What is the level of significance? State the null and alternate hypotheses. Will you use a left-tailed, right- tailed, or two-tailed test? O Ho: u # 20; H1: µ = 20; two-tailed O Ho: H = 20; H1: µ > 20; right-tailed O Ho: H = 20; H1: µ < 20; left-tailed O Ho: H = 20; H1: µ # 20; two-tailed (b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution. O The Student's t, since n is large with unknown ơ. O The standard normal, since we assume that x has a normal distribution with known ơ. O The Student's t, since we assume that x has a normal distribution with known o. O The standard normal, since we assume that x has a normal distribution with unknown o. Compute the z value of the sample test statistic. (Round your answer to two decimal places.) (c) Find (or estimate) the P-value. (Round your answer to four decimal places.) Sketch the sampling distribution and show the area corresponding to the P-value. O-3 -2 O-3 -2 -1
webassign.net The price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks (J. P. Morgan, Bank of America, and others) gave the following P/E ratios.t 24 16 22 14 12 13 17 22 15 19 23 13 11 18 The sample mean is 17.1. Generally speaking, a low P/E ratio indicates a "value" or bargain stock. Suppose a recent copy of a magazine indicated that the P/E ratio of a certain stock index is µ = 20. Let x be a random variable representing the P/E ratio of all large U.S. bank stocks. We assume that x has a normal distribution and o = 5.5. Do these data indicate that the P/E ratio of all U.S. bank stocks is less than 20? Use a = 0.01. (a) What is the level of significance? State the null and alternate hypotheses. Will you use a left-tailed, right- tailed, or two-tailed test? O Ho: u # 20; H1: µ = 20; two-tailed O Ho: H = 20; H1: µ > 20; right-tailed O Ho: H = 20; H1: µ < 20; left-tailed O Ho: H = 20; H1: µ # 20; two-tailed (b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution. O The Student's t, since n is large with unknown ơ. O The standard normal, since we assume that x has a normal distribution with known ơ. O The Student's t, since we assume that x has a normal distribution with known o. O The standard normal, since we assume that x has a normal distribution with unknown o. Compute the z value of the sample test statistic. (Round your answer to two decimal places.) (c) Find (or estimate) the P-value. (Round your answer to four decimal places.) Sketch the sampling distribution and show the area corresponding to the P-value. O-3 -2 O-3 -2 -1
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...
Related questions
Question
Transcribed Image Text:webassign.net
The price to earnings ratio (P/E) is an important tool in financial work. A random
sample of 14 large U.S. banks (J. P. Morgan, Bank of America, and others) gave
the following P/E ratios.t
24 16 22 14 12 13 17 22 15 19 23 13 11 18
The sample mean is 17.1. Generally speaking, a low P/E ratio indicates a
"value" or bargain stock. Suppose a recent copy of a magazine indicated that
the P/E ratio of a certain stock index is µ = 20. Let x be a random variable
representing the P/E ratio of all large U.S. bank stocks. We assume that x has a
normal distribution and o = 5.5. Do these data indicate that the P/E ratio of all
U.S. bank stocks is less than 20? Use a = 0.01.
(a) What is the level of significance?
State the null and alternate hypotheses. Will you use a left-tailed, right-
tailed, or two-tailed test?
O Ho: u # 20; H1: µ = 20; two-tailed
O Ho: H = 20; H1: µ > 20; right-tailed
O Ho: H = 20; H1: µ < 20; left-tailed
O Ho: H = 20; H1: µ # 20; two-tailed
(b) What sampling distribution will you use? Explain the rationale for your
choice of sampling distribution.
O The Student's t, since n is large with unknown ơ.
O The standard normal, since we assume that x has a normal distribution
with known ơ.
O The Student's t, since we assume that x has a normal distribution with
known o.
O The standard normal, since we assume that x has a normal distribution
with unknown o.
Compute the z value of the sample test statistic. (Round your answer to
two decimal places.)
(c) Find (or estimate) the P-value. (Round your answer to four decimal
places.)
Sketch the sampling distribution and show the area corresponding to the
P-value.
O-3
-2
O-3
-2
-1
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, probability and related others by exploring similar questions and additional content below.Recommended textbooks for you
A First Course in Probability (10th Edition)
Probability
ISBN:
9780134753119
Author:
Sheldon Ross
Publisher:
PEARSON
A First Course in Probability (10th Edition)
Probability
ISBN:
9780134753119
Author:
Sheldon Ross
Publisher:
PEARSON