BA 1502 Spring 2020

HW8 ANSWERS

The following exercises are form the 8th edition of Newbold, Carlson, Thorne textbook.

1) Exercise 10.3
2) Exercise 10.8
3) Exercise 10.11 (a&b)
4) Exercise 10.15
5) Exercise 10.26

1) Exercise 10.3

Let x – Germen Bank and y – Great Britain Bank

H 0
:  x   y  0; H 1 :  x   y  0;

.0518  0
t = 2.04, p-value = .043. Reject H 0
at alpha levels in excess of 4.3%
.3055 145

Paired T-Test and CI

N Mean StDev SE Mean

Difference 145 0.051800 0.305500 0.025370

95% CI for mean difference: (0.001654, 0.101946)

T-Test of mean difference = 0 (vs not = 0): T-Value = 2.04 P-Value = 0.043

2) Exercise 10.8

Let x – male financial analysts; y – female financial analysts

H 0
:  x   y  0; H 1 :  x   y  0;

85.8  71.5
z = 7.334.
(19.13) 2 /151  (12.2)2 /108

Reject H 0
at all common levels of alpha

3) Exercise 10.11 (a&b)

a. Let x – auditors used the cash-flow information; y – auditors not using the cash-flow
information

H 0
:  x   y  0; H 1 :  x   y  0;
 (nx  1) sx  (ny  1) s y
2 2
35(22.93)2  35(27.56) 2
sp 
2
= = 642.66925
nx  ny  2 36  36  2

xy 36.21  47.56

t = = -1.8995
sp2 sp2 642.66925 642.66925

 36 36
nx ny

t70 (1.8995)=.0308; p-value = 2(.0308) = .0616.

Reject H 0
at levels in excess of 6.16%
2
𝑠2 𝑠2 2
[(𝑛𝑥 )+(𝑛 )]
𝑦 22.932 27.562
𝑥 𝑦 [( )+( )] 1274.7647
36 36
b. 𝑣 = 2 = 2 2 = =67.7586 ≈68
𝑠2
2 𝑠2
𝑦 22.932 27.562 18.8133
( ) ( )
( 𝑥) ( )
𝑛𝑦 36 36
𝑛𝑥 +
+ 35 35
𝑛𝑥 −1 𝑛𝑦 −1

𝐻0 : 𝜇𝑥 − 𝜇𝑦 = 0 𝑜𝑟 𝐻0 : 𝜇𝑥 − 𝜇𝑦 ≠ 0, 𝑎𝑔𝑎𝑖𝑛𝑠𝑡
𝑥̅ −𝑦̅ 36.21−47.56
t= = 5.97527
= −1.901169
2
𝑠2 𝑠
√ 𝑥+ 𝑦
𝑛𝑥 𝑛𝑦

𝑡𝑣,∝⁄2= 𝑡68,0.025 = 1.9955

𝑥̅ −𝑦̅ 𝑥̅ −𝑦̅
Reject H 0
if < -𝑡𝑣,∝⁄2 or > 𝑡𝑣,∝⁄2
2 2
𝑠2 𝑠 𝑠2 𝑠
√ 𝑥+ 𝑦 √ 𝑥+ 𝑦
𝑛𝑥 𝑛𝑦 𝑛𝑥 𝑛𝑦

Since -1.9012 > -1.9955

Do not reject the null hypothesis at 5% significance level

4) Exercise 10.15

Let x – people in the United States were positive about the future economy; y – people in Great
Britain were positive about the future economy

H 0
: Px  Py  0; H 1 : Px  Py  0;

900(.60)  900(.66)
pˆ o  = .63,
900  900
.60  .66
z = -2.63
(.63)(1  .63) (.63)(1  .63)

900 900

p-value = .0043. Therefore, reject H 0

at all common levels of alpha
5) Exercise 10.26

Let x – Books having more than 100 data files; y – books with at most 100 data files

H 0
:  2x   2 y ; H 1 :  2x   2 y ;

F = (2107)2/(1681)2 = 1.57
Therefore, do not reject H 0
at the 10% level since 1.57 < 3.18  F(9,9,.05)