Question
5) An investigator analyzed the leading digits from 761 checks issued by seven suspect companies. The frequencies were found to be 4, 19, 4, 62,
5) An investigator analyzed the leading digits from 761 checks issued by seven suspect companies. The frequencies were found to be 4, 19, 4, 62, 234, 400, 10, 17, and 11, and those digits correspond to the leading digits of 1, 2, 3, 4, 5, 6, 7, 8, and 9, respectively. If the observed frequencies are substantially different from the frequencies expected with Benford's law shown below, the check amounts appear to result from fraud. Use a 0.01 significance level to test for goodness-of-fit with Benford's law. Does it appear that the checks are the result of fraud?
Leading_Digit Actual_Frequency Benford's_Law: 1 4 30.10% 2 19 17.60% 3 4 12.50% 4 62 9.70% 5 234 7.90% 6 400 6.70% 7 10 5.80% 8 17 5.10% 9 11 4.60%
The null and alternative hypotheses:
Ho: The leading digits are from a population that conforms to Benford's law.
H1: At least one leading digit has a frequency that does not conform to Benford's law.
B: Calculatue the test statistic x2
x2=
(Round to three decimal places as needed)
C: Calculate the P-value:
P-value=
(Round to four decimal places as needed)
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