Benfords Law states that the first nonzero digits of numbers drawn at random from a large complex
Question:
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Suppose that n = 275 numerical entries were drawn at random from a large accounting file of a major corporation. The first nonzero digits were recorded for the sample.
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Use a 1% level of significance to test the claim that the distribution of first nonzero digits in this accounting file follows Benford€™s Law.
Please provide the following information.
(a) What is the level of significance? State the null and alternate hypotheses.
(b) Find the value of the chi-square statistic for the sample. Are all the expected frequencies greater than 5? What sampling distribution will you use? What are the degrees of freedom?
(c) Find or estimate the P-value of the sample test statistic.
(d) Based on your answers in parts (a)€“(c), will you reject or fail to reject the null hypothesis that the population fits the specified distribution of categories?
(e) Your conclusion in the context of the application.
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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