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The leading (first) digit of amounts on cheques follows the distribution shown below. If the observed frequencies (counts) of leading digits are different from those
The leading (first) digit of amounts on cheques follows the distribution shown below. If the observed frequencies (counts) of leading digits are different from those of this distribution, then the cheque amounts are believed to result from fraud. A random sample of 7'84 cheques from several suspected companies are examined. The frequencies of leading digits of the amounts on the cheques were: 0, 12, O, 73, 482, 186, 8, 23, and 0, for the leading digits of 1. 2, 3, 4, 5, 6, 7, 8, and 9, respectively. Use a significance level of 0.05 to test for goodness-of-fit with the distribution shown below in the table. What is the value of the test statistic? Leading Digit 1 2 3 4 5 6 7 B 9 Benford's law: 30.1% 117.6% 12.5% 9.2% 7.9% 6.2% 5.8% 5.1% 4.6% distribution of leading digits 0 chi-squared = 3?11.4 chi-squared = 3225.3 chi-squared = 3582.6 chi-squared = 3132.2 chi-square = 25.5 t = 25.5 00000
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