Suppose that an equity analyst at a prestigious investment bank wants to determi

Question

Suppose that an equity analyst at a prestigious investment bank wants to determine the relationship between a corporation's sales (in million dollars) and the price of the corporation's stock (in dollars). She assumes that stock prices are the dependent variable in this relationship, while sales are the independent variable. From the monthly observations for the past 5 years, the following results are obtained. Consider the following one-tailed hypothesis testing: H_0: beta_1 = 3 H_1: beta_1 > 3 Find the p-value and determine if the null hypothesis is rejected at 10%. (Use the standard normal approximation.) a. The p-value is 0.000%. The null hypothesis is rejected. b. The p-value is 10.960%. The null hypothesis is rejected. c. The p-value is 5.480%. The null hypothesis is NOT rejected. d. The p-value is 10.960%. The null hypothesis is NOT rejected. e. The p-value is 5.480%. The null hypothesis is rejected. f. The p-value is 0.000%. The null hypothesis is NOT rejected.

Explanation / Answer

Answer:

Upper tail test

Test value = (-3)/se= (5.40-3)/1.5 =1.6

Critical value at 10% level =1.282

P value = 0.0548   or 5.48%

e) . The p value is 5.480%. The null hypothesis is rejected.

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