# Hypothesis Testing

Please refer attached file for the tables.

1. A stock analyst wants to determine whether there is a difference in the mean rate of return for three types of stock: utility, retail, and banking stocks. The following sample information is collected.

a. Using the 0.05 level of significance, is there a difference in the mean rate of return among the three types of stock?

b. Suppose the null hypothesis is rejected. Can the analyst conclude there is a difference between the mean rates of return for the utility and the retail stocks? Explain.

2. A study regarding the relationship between age and the amount of pressure sales personnel feel in relation to their jobs revealed the following sample information. At the 0.01 significance level, is there a relationship between job pressure and age?

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#### Solution Preview

Please refer attached file for complete solution. Expressions typed with the help of equation writer are missing here.

1. A stock analyst wants to determine whether there is a difference in the mean rate of return for three types of stock: utility, retail, and banking stocks. The following sample information is collected.

a. Using the 0.05 level of significance, is there a difference in the mean rate of return among the three types of stock?

b. Suppose the null hypothesis is rejected. Can the analyst conclude there is a difference between the mean rates of return for the utility and the retail stocks? Explain.

Data Analysis function with MS Excel gives the following results

Anova: Single Factor

SUMMARY

Groups Count Sum Average Variance

Column 1 5 87 17.4 3.67

Column 2 5 58.1 11.62 0.127

Column 3 6 92.4 15.4 5.552

ANOVA

Source of Variation SS df MS F P-value F crit

Between Groups 86.49137 2 43.24569 13.09011 0.000769 3.805567

Within Groups 42.948 13 3.303692

Total ...

#### Solution Summary

There are two problems. Solution to first problem explains the methodology to test the hypothesis that there is a difference between the mean rates of return for given stocks. Solution to second problem checks if there is a relationship between job pressure and age.