An analyst is trying to determine whether the prices of certain stocks on the NA

Question

An analyst is trying to determine whether the prices of certain stocks on the NASDAQ are independent of the industry to which they belong. She examines four industries and classifies the stock prices in these industries into one of three categories (high-priced, average-priced, low-priced).

Industry

Choose the competing hypotheses to determine whether stock price depends on the industry.

An analyst is trying to determine whether the prices of certain stocks on the NASDAQ are independent of the industry to which they belong. She examines four industries and classifies the stock prices in these industries into one of three categories (high-priced, average-priced, low-priced).

Explanation / Answer

The statistical software output for this problem is:

Contingency table results:
Rows: Stock Price
Columns: None

Chi-Square test:

Hence,

a) H0: Stock price is independent of the industry.; HA: Stock price is dependent of the industry.

b - 1) Test statistic = 3.65

b - 2) p-value 0.10

c) Do not reject H0; there is not enough evidence to support the claim that the stock price is dependent on the industry.

I II III IV Total High 16 8 10 14 48 Average 18 16 10 12 56 Low 7 8 4 9 28 Total 41 32 24 35 132

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