Question

Will improving customer service result in higher stock prices for the companies providing the better service? "When a company's satisfaction score has improved over the prior year's results and is above the national average (currently 75.7), studies show its shares have good chance of outperforming the broad stock market in the long run." The following satisfaction scores of three poll of 56 customers from each company companies for the 4th quarters of two previous years were obtained from the American Customer Satisfaction Index. Assume that the scores are based on Because the polling has been done for several years, the standard deviation can be assumed to equal 7 points each case. Company Year 1 Score Year Score 76 78 Rite Aid 80 77 Expedia 82 75 J.C. Penney .05 and null hypothesis is Ho :i-20. What can you conclude? a. For Rite Aid, is the increase in the satisfaction score from year 1 year 2 statistically significant? Use a 1.51 (to 2 decimals) z value (to 4 decimals) .0655 p-value The difference statistically significant. is not b. Can you conclude that the year 2 score for Rite Aid is above the national average of 75.7? Use a.05 and null hypothesis is Ho u75.7. Enter negative value as negative number (to 2 decimals) 1.42 z value (to 4 decimals) p-value We can conclude that customer service has improved for Rite Aid. c. For Expedia, is the increase from year 1 to year 2 statistically significant? Use a05 and null hypothesis is Ho H2 0 (to 2 decimals) z value (to 4 decimals) p-value The difference is statistically significant. d. When conducting a hypothesis test with the values given for the standard deviation, sample size, and a, how large must the increase from Year 1 to Year 2 be for it to be statistically siqnificant? (to 2 decimals) e. Use the result of part (d) to state whether the increase for J.C. Penney from year 1 to year 2 is statistically significant. statistically significant. The increaseis

Answer 1

Arswor Gtoom hat (a Fov Rite aid Ha ,- >o Test stastios i5 X,-),) 7 68) 56 56 7 = -I-5T Pvalue = C.655 greatorthon o05 therefora t AS the P-Vala 1s ot staftstrcally sgnficant beteve e n diffee nca Teons 75.7 Ho Ha u> 75- Test 5tafestt. 78- 5- 9.45 $56 Pvalue = 0.o014

A P-Ualue 2 o.o5 Refect Ho Comclusion we Can Conclude that Customer serotca has fmproqued Sor TRfe Aid ( For Pedra Ha H- >o Test statstcs 56 56 P-value = o-Ol1q -fherefore the cdifferen ce -A p-Ualue less than oro5 means fealed test 645 d)At z0.05 , CrfscCal Value > I.645 56

Henee the yeoor to year sheuld nGreose be 1 (c) AS the Pemey tomyear to yeo nGreose 6>.11Ten the fnGreose statest cally goifs cont