Hypothesis test for a population mean
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Finance: P/E of Stocks. The price to earnings ratio(P/E) is an important tool in financial work. A random sample of 14 large U.S. banks gave the following P/E ratios.
24, 16, 22, 14, 12, 13, 17
22, 15, 19, 23, 13, 11, 18
The sample mean is xbar = 17.1( = sign is wavy). Generally speaking, a low P/E " value" or bargain stock. A recent copy of the Wall Street Journal indicated that the mean of the P/E ratio of the entire S&P 500 stock indexes u = 19. Let x be a random variable representing the P/E ratio of all large U. S, banks. We assume that x has a normal distribution and o = 4.5. Do these data indicate that the P/E ratio of all U.S. banks stocks is less than 19? Use a = 0.05.
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This solution is a detailed, step-by-step example of a hypothesis test for a population mean , where the population standard deviation is assumed to be known
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This solution is a detailed, step-by-step example of a hypothesis test for a population mean , where the population standard deviation is assumed to be known.
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Hypothesis testing
Finance: P/E of Stocks. The price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks gave the following P/E ratios.
24, 16, 22, 14, 12, 13, 17
22, 15, 19, 23, 13, 11, 18
the sample mean is xbar = 17.1 (= sign is wavy). Generally speaking, a low P/E is a "value" or bargain stock. A recent copy of the Wall Street Journal indicated that the mean of the P/E ratio of the entire S&P 500 stock index is u = 19. Let x be a random variable representing ...
Purchase this Solution
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