Question

Data were collected on the top 1,000 financial advisers. Company A had 239 people on the list and another company, Company B, had 121 people on the list. A sample of 16 of the advisers from Company A and 10 of the advisers from Company B showed that the advisers managed many very large accounts with a large variance in the total amount of funds managed. The standard deviation of the amount managed by advisers from Company A was

s₁ = $581 million.

The standard deviation of the amount managed by advisers from Company B was

s₂ = $483 million.

Conduct a hypothesis test at

α = 0.10

to determine if there is a significant difference in the population variances for the amounts managed by the two companies. What is your conclusion about the variability in the amount of funds managed by advisers from the two firms?

State the null and alternative hypotheses.

Find the p-value. (Round your answer to four decimal places.)

Answer 1

Answer:

Given,

Ho : 1 = 2

Ha : 1 != 2

test statistic F = S1^2 / S2^2

substitute values

= 581^2 / 483^2

= 1.45

degree of freedom df1 = n1 - 1 = 16 - 1 = 15

df2 = n2 - 1 = 10 - 1 = 9

P value = 0.291512

= 0.2915

here we observe that, p value > alpha , so we fail to reject Ho.

So there is no sufficient evidence to support the claim.