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    Hypothesis Testing Review - 2 Questions

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    An investment services company claims that the average annual return on stocks within a certain industry is 11.5%. An investor wants to test whether this claim is true and collects a random sample of 50 stocks in the industry of interest. He finds that the sample average annual return is 10.8% and that the sample standard deviation is 3.4%. Does the investor have enough evidence to reject the investment company's claim? (Use a 5% significance level.)

    The average weekly earnings for all full-time-equivalent employees are reported to be $344. Suppose you want to check this claim since you believe it is too low. You want to provide evidence that the average weekly earnings of all employees are higher than the amount claimed. You collect a random sample of 1,200 employees in all areas and find that the sample mean is $361 and the sample standard deviation is $110. Can you reject the claim?

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    Solution Summary

    Review of hypothesis testing using examples of investor claims and average weekly earnings attached as a Word document.