Author Question: True or False A portfolio manager was analyzing the price-earnings ratio for this year's ... (Read 61 times)

Chloeellawright · **on:** Jun 24, 2018

True or False A portfolio manager was analyzing the price-earnings ratio for this year's performance. His boss said that the average price-earnings ratio was 20 for the many stocks, which his firm had traded, but he felt that figure was too high. The portfolio manager randomly selected a sample of 50 P/E ratios and found a mean of 18.17 and standard deviation of 4.60 . Assume that the population is normally distributed and test at the 0.01 level of significance. The decision is: Because the test statistic t = -2.83 is not less than -2.33, fail to reject H0 . At the 0.01 level, the sample data suggest that the average P/E ratio for the stocks is not less than 20.
Indicate whether the statement is true or false

Question 2

True or False A portfolio manager was analyzing the price-earnings ratio for this year's performance. His boss said that the average price-earnings ratio was 20 for the many stocks, which his firm had traded, but he felt that figure was too high. The portfolio manager randomly selected a sample of 50 P/E ratios and found a mean of 18.17 and standard deviation of 4.60 . Assume that the population is normally distributed and test at the 0.01 level of significance. The decision is: Because the test statistic t = 2.81 is greater than 2.33, reject H0 . At the 0.01 level, the sample data suggest that the average P/E ratio for the stocks is less than 20.
Indicate whether the statement is true or false