Question

9. In preparing a defense against a hostile takeover, a firm’s management assesses the owners of both common and preferred stock with respect to their attitudes toward current management. Of 600 common stockholders, 322 reported being in favor of a change in management. A sample of 220 preferred stockholders found 141 in favor of a management change. The firm’s management is interested in finding evidence at the .05 significance level of a difference in the proportions of common stock holders and preferred stock holders that favor a management change.

Which of the following pairs of hypotheses reflect the question of interest?

		H0: pc≥ pp HA: pc< pp
		H0: σ c≥ σ p HA: σ c< σ p
		H0: pc= pp HA: pc≠ pp
		H0: µc= µp HA: µc≠ µp
		H0: σ c≤ σ p HA: σ c> σ p

10. What's the value of the test statistic?

11. What's the p-value for the test statistic in #10?

12. What is the correct decision?

		Reject HA
		Reject H0
		Don't Reject HA
		Don't Reject H0

Answer 1

from above:

9)

H₀: p_c= p_p H_A: p_c≠ p_p

10)

value of the test statistic =-2.66 (try -2.67 if this comes wrong)

11)

p-value =0.0078 (try 0.0076 if this comes wrong)

12)

Reject H0