Question
A portfolio manager has established a criterion to only invest in companies with price-to-earnings ratio (P/E ratio) below 15. He is thinking of investing in
A portfolio manager has established a criterion to only invest in companies with price-to-earnings ratio (P/E ratio) below 15. He is thinking of investing in companies in a certain sector. The portfolio manager wants to determine if the average P/E ratio of companies from the sector satisfies his investment criterion. To measure the companies' P/E ratio, a survey was commissioned. The data collected from a random sample of companies from the sector is shown in a table in Appendix 1. Determine if the average P/E ratio of companies from the sector has met the portfolio manager's criterion with a hypothesis test at 5% significance level
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