The average daily volume of Motorola stock in 2000was µ = 11.4 million shares, w

Question

The average daily volume of Motorola stock in 2000was µ = 11.4 million shares, with a standarddeviation of = 8.3 million shares, according toYahoo!Finance web site. Based on a random sample of 35 trading daysin 2006, the sample mean number of shares traded is found to be15.3 million shares. Is the volume of Motorola stock different in2006? Use the = 0.05 level of significance. .

(a) Identify the claim. Then state the hypotheses.

(b) Identify the level of significance.

(c) Find the standardized test statistic z.

(d) Find the P-value.

(e) Decide whether to reject the null hypothesis.

(f)   Interpret the decision in the context of theoriginal claim.

Explanation / Answer

(a) The test hypothesis is

Ho:=11.4
Ha: not equal 11.4
(b) Given = 0.05, since it is two-tailed test,=0.05/2=0.025
(c) The test statisitc is

Z=(xbar-)/(/n)
=(15.3-11.4)/(8.3/sqrt(35))
=2.78

(d) Since it is two-tailed test, the p-value is2*P(Z>2.78)=0.0054 (check normal table) (e) Since the p-value=0.0054< =0.025, we rejectHo. (f) So we conclude that the volume of Motorola stock isdifferent in 2006

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