Statistics for Business and Economics (13th Edition)

13th Edition

ISBN: 9780134506593

Author: James T. McClave, P. George Benson, Terry Sincich

Publisher: PEARSON

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Textbook Question

Chapter 7.4, Problem 7.43ACI

Buy-side vs. sell-side analysts’ earnings forecasts. Refer to the Financial Analysts Journal (July/August 2008) study of earnings forecasts of buy-side and sell-side analysts, Exercise 2.86 (p. 88). Recall that data were collected on 3,526 forecasts made by buy-side analysts and 58,562 forecasts made by sell-side analysts, and the relative absolute forecast error was determined for each. A positive forecast error indicates that the analyst is overestimating earnings, while a negative forecast error implies that the analyst is underestimating earnings. Summary statistics for the forecast errors in the two samples are reproduced in the table below.

	Buy-Side Analysts	Self-side Analysts
Mean	0.85	−0.05
Standard Deviation	1.93	0.85

a. Conduct a test (at α = .01) to determine if the true mean forecast error for buy-side analysts is positive. Use the observed significance level (p-value) of the test to make your decision and state your conclusion in the words of the problem.
b. Conduct a test (at α =. 01) to determine if the true mean forecast error for sell-side analysis is negative. Use the observed significance level (p-value) of the test to make your decision and state your conclusion in the words of the problem.

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Chapter 7.4, Problem 7.42ACI

Chapter 7.4, Problem 7.44ACI

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Chapter 7 Solutions

Statistics for Business and Economics (13th Edition)

Ch. 7.2 - Which hypothesis, the null or the alternative, is...Ch. 7.2 - Which element of a test of hypothesis is used to...Ch. 7.2 - What is the level of significance of a test of...Ch. 7.2 - What is the difference between Type I and Type II...Ch. 7.2 - List the four possible results of the combinations...Ch. 7.2 - We reject the null hypothesis when the test...Ch. 7.2 - If you test a hypothesis and reject the null...Ch. 7.2 - For each of the following rejection regions,...Ch. 7.2 - Use the applet Hypothesis Test for a Mean to...Ch. 7.2 - Americans favorite sport. The Harris Poll...

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For each of the...Ch. 7.3 - If a hypothesis test were conducted using = .05,...Ch. 7.3 - For each and observed significance level...Ch. 7.3 - In a test of the hypothesis H0: = 50 versus H0: ...Ch. 7.3 - In a test of H0: = 100 against Ha: 100 the...Ch. 7.3 - In a test of the hypothesis H0: = 10 versus Ha: ...Ch. 7.3 - In a test of H0: = 100 against Ha: 100, the...Ch. 7.3 - In a test of H0: = 75 performed using the...Ch. 7.3 - An analyst tested the null hypothesis that 20...Ch. 7.4 - Consider the test H0: = 70 versus Ha: 70 using...Ch. 7.4 - Suppose you are interested in conducting the...Ch. 7.4 - A random sample of 100 observations from a...Ch. 7.4 - A random sample of 64 observations produced the...Ch. 7.4 - Use the applet Hypotheses Test for a Mean to...Ch. 7.4 - Use the applet Hypotheses Test for a Mean to...Ch. 7.4 - Use the applet Hypotheses Test for a Mean to...Ch. 7.4 - Corporate sustainability of CPA firms. Refer to...Ch. 7.4 - Packaging of a childrens health food. 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