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Hypothesis Testing of Variance

A finance professor claims that there is much more variability in the final exam scores of students taking the introductory finance course as a requirement than for students taking the course as part of a major in finance. Random samples of 16 non-finance majors (group 1) and 10 finance majors (group 2) are taken from the professors class roster in his large lecture. The standard deviation of group 1 is 14.4361 while the standard deviation of group 2 is 6.28491.

a. Formulate a hypothesis to test whether or not there is evidence to support the professors claim.

b. At the 0.05 level of significance, using the critical value approach, is there evidence to support the professors claim? What is your conclusion?

c.Using a 0.05 level of significance and the p-value approach, what is the p-value? And what is your conclusion?

d.What assumption do you need to make in (b) about the two populations in order to justify your use of the test?

I need the calculations shown on this as well. Thanks!

Solution Summary

The solution provides step by step method for the calculation of testing of hypothesis. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.