1. The Wall Street Journal’s Shareholder Scoreboard tracks the performance of 10

Question

1.      The Wall Street Journal’s Shareholder Scoreboard tracks the performance of 1000 largest U.S. companies. The performance of each company is rated based on the annual total return, including stock price changes and the re-investment of dividends. Ratings are assigned by dividing all 1000 largest U.S. companies into four groups of equal size Group A (top rating), B (second best rating), C (third best rating), and D (bottom most rating). Shown here are the one- year ratings for a sample of 50 largest U.S. companies. Does the sample data provide evidence that the ratings are equally likely for the largest U.S. companies based on both the p-value and critical-value approaches? Use = .025.

A

B

C

D

22

9

14

5

Please tell me exactly what to type in Excel to get these answers and if there are any formulas that could be used. Thanks so much

A

B

C

D

22

9

14

5

Explanation / Answer

null hypothesis: Ho: rating are equally likely

alternate hypothesis: Ha:rating are not equally likely

applying chi square goodness of fit test:

for above test stat X2 =12.88

degree of freedom =number of categories -1 =4-1=3

for 3 degree of freedom and above test stat p value =chidist(12.88,3)=0.0049

as p value is less then 0.025 level we reject null hypothesis and conclude that

rating are not equally likely

observed Expected Chi square Type Probability O E=total*p =(O-E)^2/E A 0.250 22.000 12.50 7.22 B 0.250 9.000 12.50 0.98 C 0.250 14.000 12.50 0.18 D 0.250 5.000 12.50 4.50 1 50 50 12.8800

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