On its first day on the stock market, the Chinese Internet search engine, Baidu, increased its share

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On its first day on the stock market, the Chinese Internet search engine, Baidu, increased its share price from $27.00 to $122.54, an increase of 454%. This was larger than any other Chinese initial public offering (IPO) and the second biggest for a foreign IPO. However, of the nine other biggest foreign IPOs with the largest first-day gains, all are trading below their IPO prices by an average of 88%. To determine the relationship between the IPOs with the largest first-day gains and the other IPOs, a sample might be taken to determine the average percentage decrease in the share prices of those IPOs not in the group of the nine IPOs with the largest first-day gains. A file titled BigIPO$ contains such a sample. Note that an increase in share prices is represented as a negative decrease.
a. Calculate a 95% confidence interval for the average percentage decrease after the first-day offering in the share of those IPOs not in the 9 IPOs with the largest first-day gains.
b. Does it appear that there is a difference in the average percentage decrease in the share prices of the two groups? Support your assertions.
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Business Statistics A Decision Making Approach

ISBN: 9780133021844

9th Edition

Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry

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