An econom ist wants to determ ine w hether the Price/

Earnings (P/E) ratio is the same for firm s in three industries.

Source: h t tp : //fin a n c e .y a h o o .c o m .

Independent samples o f five firm s in each industry show the follow ing results. The data are also available on the text website, labeled Industry P /E .

In d u s try A 12.19 12.44 7.28 9.96 10.51 in d u s try B 14.34 17.80 9.32 14.90 9.41 In d u s try C 26.38 24.75 16.88 16.87 16.70

a. Specify the com peting hypotheses to test w hether the median P/E ratios differ by industry.

b. Calculate the value o f the test statistic H.

c. At the 5% significance level, w hat is the critical value?

d. Do P/E ratios differ by industry? Explain.