Many investors and financial analysts believe the Dow Jones
Industrial Average (DJIA) gives a good barometer of the overall
stock market. On January 31, 2006, 9 of the 30 stocks making up the
DJIA increased in price (The Wall Street Journal, February 1,
2006). On the basis of this fact, a financial analyst claims we can
assume that 30% of the stocks traded on the New York Stock Exchange
(NYSE) went up the same day.
A sample of 69 stocks traded on the NYSE that day showed that 17
went up.
You are conducting a study to see if the proportion of stocks that
went up is is significantly less than 0.3. You use a significance
level of α=0.001α=0.001.
What is the test statistic for this sample? (Report answer accurate
to three decimal places.)
test statistic =
What is the p-value for this sample? (Report answer accurate to
four decimal places.)
p-value =
The p-value is...
This test statistic leads to a decision to...
As such, the final conclusion is that...
Let p denotes the true proportion of stocks that went up.
To test against
Here
sample proportion
and sample size
The test statistic can be written as
which under H0 follows a standard normal distribution.
We reject H0 at α=0.001 if P-value < 0.001
Now,
The value of the test statistic
P-value
P-value is greater than α = 0.001
This test statistic leads to a decision to fail to reject the null hypothesis.
As such, the final conclusion is that
There is not sufficient sample evidence to support the claim that the proportion of stocks that went up is is less than 0.3.
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