Question

The sample mean is xbar = 5.38%. Suppose that for the entire stock market, the mean dividend yield is 4.4%. Do these data indicate that the dividend yield of all bank stocks is higher than 4.4%? Use alpha 0.01. compute the z value of the sample test statistic .

Answer 1

It's not mentioned explicitly, but I assume the sample mean xbar = 5.38% given here refers to the mean dividend yield of Bank stocks.

Mean dividend yield of 4.4% for the entire stock market does not indicate that the dividend yield of all Bank stocks is higher than 4.4%. The higher mean dividend yield of the Bank stocks of 5.38% compared to that of the market, could be because of some Bank stocks paying exceptionally higher dividends, while other paying sub-market dividends at the same time.

Z-value of the sample test-statistic,

=> Z = (5.38 - 4.4) /

Where is the std deviation of bank dividend yields, and n is the no. of Bank stocks. Knowing the values of and n, we can compute the value of the sample test statistic as above.