Question

Two well-known analysts have predicted that Garmin’s stock value will increase by at least 20% in the next month.

a. Rewrite this as a hypothesis. Then, write the corresponding null hypothesis.

b. Is your hypothesis one-sided or two-sided? Explain your answer.

A third analyst has predicted that Garmin’s price will change.

c. Rewrite this as a hypothesis. Then, write the corresponding null hypothesis.

d. Is your hypothesis one-sided or two-sided? Explain your answer.

Answer 1

is the mean stock price

let be the current mean stock price
according to the two analysts the stock price will increase atleast 20% that is (1+20/100)* let us call it

so our hypothesis is

a>null hypothesis: = vs alternative ;>

b> it is a one sided hypothesis as we want to check whether the mean value in the next month is greater than the current value, to be specific 20% of the current value here.

the third analyst has predicted garmin's price will change

our hypothesis in this case will be

a>null hypothesis: = vs alternative

b>here the hypothesis is two sided , as we want to check whether the price has changed or not , we have to check both the greater than and lesser than cases hence making it a two sided hypothesis.