Question

In the New York Stock Exchange, officials claim that mutual funds pay an average dividend of $200 per quarter. A financial analyst conducts a research study to show that the average dividend is actually greater. He collects data from a random sample of 90 mutual funds and obtains a sample mean dividend of $220 per quarter with a standard deviation of $100.

Qa. Develop the null and alternative hypotheses.

Qb. Using ? = 0.02, what is the rejection rule?.

Qc. Should H0 be rejected?

Qd. Based on your answer in part (d), what is your conclusion as it applies to THIS SITUATION. Be specific.

Answer 1

a) Null Hypothesis (claim)

Alternative Hypothesis (right tailed test)

b) Significance Level

Degrees of freedom = n-1= 90-1 = 89

Reject H0, if t > 2.084

c ) Under H0, the test statistic is

The P-Value is .0305

Since p value is greater than significance level, Fail to reject H0.

The null hypothesis should not be rejected.

d) Hence, at 2% significance level, we have enough evidence to support the claim that mutual funds pay an average dividend of $200 per quarter