Some have argued that throwing darts at the stock pages to decide which companie

ID: 2907100 • Letter: S

Question

Some have argued that throwing darts at the stock pages to decide which companies to invest in could be a successful stock-picking strategy. Suppose a researcher decides to test this theory and randomly chooses 50 companies to invest in. After 1 year, 26 of the companies were considered winners; that is, they outperformed other companies in the same investment class. To assess whether the dart-picking strategy resulted in a majority of winners, the researcher tested H p = 0.5 versus HI : p > 0.5 and obtained a P-value of 0.3886. Explain what this P value means and write a conclusion or the researcher Assume ? is 0.1 or less. Choose the correct explanation below. A. About 39 in 100 samples will give a sample proportion as high or higher than the one obtained if the population proportion really is 0.5 O B. About 26 in 50 samples will give a sample proportion as high or higher than the one obtained if the population proportion really is greater than 05. OC. About 26 in 50 samples will give a sample proportion as high or higher than the one obtained if the population proportion really is 0.5 O D. About 39 in 100 samples will give a sample proportion as high or higher than the one obtained if the population proportion really is greater than 0.5. Choose the correct conclusion below. O A. Because this probability is small, reject the null hypothesis. There is sufficient evidence to conclude that the dart-picking strategy resulted in a majority of winners O B. Because this probability is not small, reject the null hypothesis. There is sufficient evidence to conclude that the dart-picking strategy resulted in a majority of winners O C. Because this probability is not small, do not reject the null hypothesis. There is not sufficient evidence to conclude that the dart-picking strategy resulted in a majority of winners. OD. Because this probability is small, do not reject the null hypothesis. There is not sufficient evidence to conclude that the dart-picking strategy resulted in a majority of winners

Explanation / Answer

Ho: p=.5 v/s h1: p>0.5

P value = 0.3886

Alpha= 0.1

With p-value > alpha, I fail to reject the null hypothesis at 10% level of significance.When there is no sufficient evidence to conclude that population proportion is greater than 50%.

Hence option C is correct. C. about 26th in 50 samples will give a sample proportion as high or higher than the one obtained if the population proportion really is 50%

With p-value > alpha, I fail to reject the null hypothesis at 10% level of significance.When there is no sufficient evidence to conclude that population proportion is greater than 50%.

C. Because the probability is not small, to not to check the null hypothesis. There is not sufficient evidence to conclude that the dark picking strategy resulted in a majority of Winners.

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