Data Sheet2 Sheet3 Per Share Qtr. Earnings Current Previous Company ADVO Alaska
ID: 3353955 • Letter: D
Question
Data Sheet2 Sheet3 Per Share Qtr. Earnings Current Previous Company ADVO Alaska Air Amgen AT&T; Becton Dickinson Brunswick Conexant Dow Jones First Data Franklin Resources Gentex Honeywell .26 1.66 0,53 0.21 0.75 0.59 0.26 0.43 0,56 1.15 0.46 0.9 0.52 1.21 0.19 0.18 0.76 LSI Logic Lockheed Martin MarineMax Merchants Bncshrs NCR Newell Rubbermaid Novellus Systems Pantry Inc Qualcomm Suncor Energy United Parce Washington Trust 0.53 -0.51 0.83 0.17 0.51 0.68 0.45 0.27 1.29 0.17 .45 0.3 0.72 0.76 0.4 1.48Explanation / Answer
Since the earnings are for the same stock a paired t-test most appropriate.
Back-up Theory
Let X = earnings per share for previous quarter
Y = earnings per share for current quarter
And D = Y – X.
Then, D ~ N(µ, 2) where 2 is unknown.
Claim:
There is no difference between the earnings per share for the two quarters
Hypotheses:
Null: H0: µ = µ0= 0 Vs Alternative: HA: µ 0
Test Statistic:
t = (n) (Dbar - µ0)/s where
Dbar and s are respectively, sample average and sample standard deviation based on n observations on X and Y.
Calculations
Summary of Excel calculations is given below:
i
xi
yi
di
1
0.26
0.38
0.12
2
-1.66
-1.15
0.51
3
0.53
0.66
0.13
4
0.21
0.46
0.25
5
0.75
0.85
0.1
6
0.59
0.9
0.31
7
-0.26
-0.05
0.21
8
0.43
0.49
0.06
9
0.56
0.52
-0.04
10
0.92
1.21
0.29
11
0.18
0.19
0.01
12
0.3
0.62
0.32
13
0.53
0.76
0.23
14
-0.51
0.09
0.6
15
0.83
1.29
0.46
16
0.17
0.04
-0.13
17
0.51
0.46
-0.05
18
0.68
0.81
0.13
19
0.45
0.28
-0.17
20
0.27
0.17
-0.1
21
0.59
1.45
0.86
22
0.3
0.36
0.06
23
0.72
1.48
0.76
24
0.76
0.95
0.19
25
0.4
0.45
0.05
n =
25
dbar
0.2064
s(d)
0.26536
µ0
0
tcal
3.889
Rejection Region
tcrit = upper 2.5% of t24 = 2.064
p-value = P(|t24| > tcal) = 0.000697
Reject H0 if tcal > tcrit or p-value < 0.025.
Decision
Since tcal (3.889) > tcrit (2.064), H0 is rejected, which is once again confirmed by p-value (0.000697) < 0.05 (level of significance).
So, there is enough evidence to suggest that there is significant difference between the average earnings per share for the two quarters. ANSWER
i
xi
yi
di
1
0.26
0.38
0.12
2
-1.66
-1.15
0.51
3
0.53
0.66
0.13
4
0.21
0.46
0.25
5
0.75
0.85
0.1
6
0.59
0.9
0.31
7
-0.26
-0.05
0.21
8
0.43
0.49
0.06
9
0.56
0.52
-0.04
10
0.92
1.21
0.29
11
0.18
0.19
0.01
12
0.3
0.62
0.32
13
0.53
0.76
0.23
14
-0.51
0.09
0.6
15
0.83
1.29
0.46
16
0.17
0.04
-0.13
17
0.51
0.46
-0.05
18
0.68
0.81
0.13
19
0.45
0.28
-0.17
20
0.27
0.17
-0.1
21
0.59
1.45
0.86
22
0.3
0.36
0.06
23
0.72
1.48
0.76
24
0.76
0.95
0.19
25
0.4
0.45
0.05
n =
25
dbar
0.2064
s(d)
0.26536
µ0
0
tcal
3.889
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.