Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me quick! The price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks

Please help me quick!

The price to earnings ratio (P/E) is an important tool in financial work. A random sample of 14 large U.S. banks (J. P. Morgan, Bank of America, and others) gave the following P/E ratios.

24 16 22 14 12 13 17 22 15 19 23 13 11

18

The sample mean isx17.1. Generally speaking, a low P/E ratio indicates a "value" or bargain stock. Suppose a recent copy of a magazine indicated that the P/E ratio of a certain stock index is=19. Letxbe a random variable representing the P/E ratio of all large U.S. bank stocks. We assume thatxhas a normal distribution and=4.5.Do these data indicate that the P/E ratio of all U.S. bank stocks is less than19? Use=0.01.

(a) What is the level of significance?

b) What is the value of the sample test statistic? (Round your answer to two decimal places.)

(c) Find (or estimate) theP-value. (Round your answer to four decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Calculus Of A Single Variable

Authors: Ron Larson, Bruce H. Edwards

11th Edition

978-1337275361, 9781337275361

More Books

Students also viewed these Mathematics questions