Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Standard view
Full view
of .
0 of .
Results for:
P. 1

Ratings: (0)|Views: 7 |Likes:
Quantitative Tools for Management [Stats II] - Umass Amherst - Textbook: A Course in Business Statistics [4th Edition] by David Groebner, Patrick Shannon, Phillip Fry, & Kent Smith
Quantitative Tools for Management [Stats II] - Umass Amherst - Textbook: A Course in Business Statistics [4th Edition] by David Groebner, Patrick Shannon, Phillip Fry, & Kent Smith

Availability:

See more
See less

01/01/2013

pdf

text

original

O
11
=
14
O
12
=
16
O
13
=
12
O
21
=
6
O
22
=
8
O
23
=
6
O
31
=
16
O
32
=
14
O
33
=
8
n
=
100
α = .05Price Change Previous DayPriceChangeTodayUpNo ChangeDown
Total
Up141612
42
NoChange686
20
Down16148
38Total363826100
The hypothesis test is formed as:
H
O
=
Daily change in stock prices is independent of previous day's change
H
A
=
Daily change in stock prices is not independent of previous day's change
Next we find the critical chi squared value for a significance level of .05.The degrees of freedom is found as follows:
df
=
1

c
1
df
=
3
1

3
1
df
=
2

2
df
=
4
For a significance level of .05, with 4 degrees of freedom the critical chi squared value is 9.4877.The decision rule is:
If
χ
2
χ
α
2,
donot rejectthe nullhypothesis ,otherwisereject the nullhypothesis
Plugging in our critical chi squared value:
If
χ
2
χ
.052
=
9.4877
If
χ
2
9.4877,
donotreject thenull hypothesis ,otherwiserejectthe null hypothesis