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adam pieniazek 9 52

adam pieniazek 9 52

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Published by Adam Pieniazek
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

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Published by: Adam Pieniazek on May 28, 2007
Copyright:Attribution Non-commercial

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01/01/2013

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Adam Pieniazek Exercise 9.52Given:
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

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