Data was collected on daily stock prices at the Nairobi Securities Exchange. The
ID: 3361877 • Letter: D
Question
Data was collected on daily stock prices at the Nairobi Securities Exchange. The average stock price(in Kshs) of a random sample and information related to the hypothesis test is presented below:
Test of Q>100 versus one-tailed alternative
Hypothesized mean 100
sample mean 98.5
Std. error of mean 0.777
Degree of freedom 19
t-test statistic (1.932)
p-value 0.034
a) Can the sample size be determined from the information above? Yes or no? If yes, what is the sample size in this case?
b) You believe the mean stock price is actually less than Kshs 100, should you conduct a one tailed or two tailed hypothesis test. Explain
c)What is the sample mean of the data. If you use a 5% significant level, would you conclude that the mean stock price is typically more than Kshs 100. Explain
d) If you use a 1% significant level of the case would you conclude that the mean stock price is typically more than Kshs 100. Explain
Explanation / Answer
a)
Yes from degree of freedom we can determine the sample size.
Sampel size: n = df+1 = 19+1 = 20
b)
One tail
In that case alternative hypothesis will be
Ha : Q < 100
c)
The sample mean is 98.5
The p-value is 0.034
Since p-value is less than 0.05 so we cannot conclude that the mean stock price is typically more than Kshs 100 at 5% significance level.
d)
Since p-value is not less than 0.01 so we can conclude that the mean stock price is typically more than Kshs 100 at 1% significance level.
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