Question
13Socially conscious investors screen out stocks of alcohol and tobacco makers, firms with poor environmental records, and companies with poor labor practices. Some examples of
13Socially conscious investors screen out stocks of alcohol and tobacco makers, firms with poor environmental records, and companies with poor labor practices. Some examples of "good," socially conscious companies are Johnson and Johnson, Dell Computers, Bank of America, and Home Depot. The question is, are such stocks overpriced? One measure of value is the P/E, or price-to-earnings ratio. High P/E ratios may indicate a stock is overpriced. For the S&P Stock Index of all major stocks, the mean P/E ratio is = 19.4. A random sample of 36 "socially conscious" stocks gave a P/E ratio sample mean of x = 17.9, with sample standard deviation s = 5.6. Does this indicate that the mean P/E ratio of all socially conscious stocks is different (either way) from the mean P/E ratio of the S&P Stock Index? Use = 0.05.
(a) What is the level of significance?
What is the value of the sample test statistic? (Round your answer to three decimal places.)
14Unfortunately, arsenic occurs naturally in some ground water. A mean arsenic level of = 8.0 parts per billion (ppb) is considered safe for agricultural use. A well in Texas is used to water cotton crops. This well is tested on a regular basis for arsenic. A random sample of 41 tests gave a sample mean of x = 6.8 ppb arsenic, with s = 2.9 ppb. Does this information indicate that the mean level of arsenic in this well is less than 8 ppb? Use = 0.01.
(a) What is the level of significance?
State the null and alternate hypotheses.
H0: < 8 ppb; H1: = 8 ppb
H0: > 8 ppb; H1: = 8 ppb
H0: = 8 ppb; H1: > 8 ppb
H0: = 8 ppb; H1: < 8 ppb
H0: = 8 ppb; H1: 8 ppb
What is the value of the sample test statistic? (Round your answer to three decimal places.)
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