Purchase Solution

Stats and Financial Analysis

Not what you're looking for?

Need to understand these statistics questions. The question involve scatter diagrams, correlation coefficients, ANOVA tables, mean absolute deviation, revenue and cost functions, maximizing profits, and payoff tables.

Solution Summary

The examined examines statistics and financial analysis for ANOVA tables. The payoff tables are provided.

Solution Preview

Problem 1
The average prices for a product in twelve stores in a city are shown below.
\$1.99, \$1.85, \$1.25, \$2.55, \$2.00, \$1.99, \$1.76, \$2.50, \$2.20, \$1.85, \$2.75, \$2.85
Test the hypothesis that the average price is higher than \$1.87. Use level of significance  = 0.05.

Ho: µ=1.87
Ha: µ>1.87
This is a one tailed t test.
Degree of freedom: 12-1=11.
Mean: (1.99+1.85+1.25+2.55+2.00+1.99+1.76+2.50+2.20+1.85+2.75+2.85)/12=2.128
Standard deviation: sqrt(((1.99-2.128)^2+(1.85-2.128)^2+...+(2.85-2.128)^2)/(12-1))=0.462
Test value t=(2.128-1.87)/(0.462/sqrt(12))=1.934
P value=Tdist(1.934,11,1)=0.0396 (Tdist is a function in excel, 11 is the degree of freedom, 1 means one tailed test).
Since P value is less than 0.05, we reject Ho.
Based on the test, we could conclude that the average price is higher than \$1.87.

Problem 2
A store wants to predict net profit as a function of sales for next year. Historical data for 8 years is given in the table below.

Year Sales
(thousands of dollars) Net Profit
1 59 5.0
2 50 8.4
3 51 9.5
4 65 8.6
5 80 1.5
6 85 -2.1
7 95 1.2
8 90 1.8

(a) Make a scatter diagram for the data, using Sales for the independent variable and Net Profit for the dependent variable. Insert the trend line and add the equation and R2 value to the diagram.

(b) Determine the correlation coefficient. Comment on the value of the correlation coefficient.
First, from the scatter plot, we could see that there is a negative correlation between sales and net profits.
Therefore, correlation coefficient: -sqrt(0.7467)=-0.864.
Since the value is close to -1, it suggests a strong negative correlation between sales and net profits.

(c) Find the predicted value of Y given X = 75. Give an interpretation of the predicted value in the context ...

Free BrainMass Quizzes

Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.

Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.

Terms and Definitions for Statistics

This quiz covers basic terms and definitions of statistics.

Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.