# Statistics - Non-parametric method Sign Test exercise.

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Using the non-parametric method - Sign Test to complete the following.

Are stock splits beneficial to stockholders? SNL Securities studied stock splits in the banking industry over an 18-month period and found that stock splits tended to increase the value of an individual?s stock holding. Assume that of a sample of 20 recent stock splits, 14 led to an increase in value, four led to a decrease in value, and two resulted in no change. Suppose a sign test is to be used to determine whether stock splits continue to be beneficial for holders of bank stocks.

1) What are the null and alternative hypotheses?

2) With alpha = .05, what is the rejection rule?

3) What is your conclusion?

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##### Solution Summary

The solution discusses non-parametric method sign tests exercise.

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