III. The average population earnings per share for financial service corporations, such as American Express, E * Trade Group, Goldman Sachs and Merril Lynch, were $ 3 (Business Week, August 14, 2000). In 2001, the following earnings data per share was obtained for a sample of 10 financial services corporations:
1.92 |
2.16 |
3.63 |
3.16 |
4.02 |
3.14 |
2.20 |
2.34 |
3.05 |
2.38 |
Perform the analysis required to determine if the average population earnings per share in 2001 differ from the three dollars reported in 2000, with a 5.0% margin of error.
Consider X be the random variable denoting the earnings of the financial services.
Here X follows normal distribution , since the sample size is small and population standard deviation is unknown so t distribution will use with n-1=10-1=9 degrees of freedom.
The sample mean is given by
=28/10=2.8
The sample standard deviation is given by
=0.7
Hypothesis can be written as:
The null hypothesis be that mean average earnings is equal to $3.
The alternate hypothesis be that mean average earnings is not equal to $3.
Ho:=3 vs H1:3
TEST STATISTICS IS GIVEN BY
substituting the values test statistics obtained is -0.903.
The t-critical at 5% margin of error with 9 degree of freedom form the t value table is 1.833.
The test statistic is less than 5% critical value which is 1.833.
So, the null hypothesis is accepted and it can be concluded that the mean average earing is equal to $3.
III. The average population earnings per share for financial service corporations, such as American Express, E...
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