Question

An analyst is trying to determine whether the prices of certain stocks on the NASDAQ are independent of the industry to which they belong. She examines four industries and classifies the stock prices in these industries into one of three categories (high-priced, average-priced, low-priced).

	Industry
Stock Price	I	II	III	IV
High	26	14	12	22
Average	30	28	19	14
Low	9	8	8	13

Click here for the Excel Data File

a.

Choose the competing hypotheses to determine whether stock price depends on the industry.

	H0: Stock price is independent of the industry.; HA: Stock price is dependent of the industry.
	H0: Stock price is dependent on the industry.; HA: Stock price is independent of the industry.

b-1.	Calculate the value of the test statistic. (Round intermediate calculations to 4 decimal places and your final answer to 2 decimal places.)

Test statistic

b-2.	Use Excel to calculate the p-value. (Round your answer to 4 decimal places.)

p-value

c.

At a 1.0% significance level, what can the analyst conclude?

	Reject H0; the stock price is not dependent on the industry
	Reject H0; the stock price is dependent on the industry
	Do not reject H0; the stock price is not dependent on the industry
	Do not reject H0; the stock price is dependent on the industry

Answer 1

The statistical software output for this problem is :

H₀: Stock price is independent of the industry.;

H_A: Stock price is dependent of the industry.

Test statistics = 9.63

P-value = 0.1410

Do not reject H₀; the stock price is not dependent on the industry