A study of the pay of corporate chief executive officers (CEOs) examined the inc

Question

A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash compensation of the CEOs of 104 companies, adjusted for inflation, in a recent year. The mean increase in real compensation was x = 7.8%, and the standard deviation of the increases was s = 53%. Is this good evidence that the mean real compensation of all CEOs increased that year?

Because the sample size is large, the sample s is close to the population , so take = 53%.

(a) Sketch the normal curve for the sampling distribution of x when Ho is true. Shade the area that represents the P-value for the observed outcome x = 7.8%. (Do this on paper. Your instructor may ask you to turn in this work.)

(b) Calculate the P-value. (Round your answer to four decimal places.)

Explanation / Answer

n=104 x=7.8 s=53 u=0

t = (7.8-0)/(53/sqrt(104))

t = 1.502

degree of freedom = n-1 = 103

a = 0.05

P-value for t=1.502 and df=103

= 0.1362

Since P-value is greater than 'a' hence we fail to reject H0

study gives NO evidence that the mean compensation of all CEOs went up

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