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# 918.

## Gulfstream Aerospace Company produced three different prototypes as

candidates for mass production as the companys newest large-cabin
business jet, the Gulfstream IV. Each of the three prototypes has slightly
different features, which may bring about differences in performance.
Therefore, as part of the decision-making process concerning which model to
produce, company engineers are interested in determining whether the three
proposed models have about the same average flight range. Each of the
models is assigned a random choice of 10 flight routes and departure times,
and the flight range on a full standard fuel tank is measured (the planes carry
additional fuel on the test flights, to allow them to land safely at certain
destination points). Range data for the three prototypes, in nautical miles
(measured to the nearest 10 miles), are as follows.
Protot
Protot
Protot
ype A
ype B
ype C
4,420
4,230
4,110
4,540
4,220
4,090
4,380
4,100
4,070
4,550
4,300
4,160
4,210
4,420
4,230
4,330
4,110
4,120
4,400
4,230
4,000
4,340
4,280
4,200
4,390
4,090
4,150
4,510
4,320
4,220
Do all three prototypes have the same average range? Construct an ANOVA
table, and carry out the test. Explain your results.
Ans:
F = 20.708, F(0.01,2,27)=5.49

919. In the theory of finance, a market for any asset or commodity is said to
be efficient if items of identical quality and other attributes (such as risk, in
the case of stocks) are sold at the same price. A Geneva-based oil industry
analyst wants to test the hypothesis that the spot market for crude oil is
efficient. The analyst chooses the Rotterdam oil market, and he selects
Arabian Light as the type of oil to be studied. (Differences in location may
cause price differences because of transportation costs, and differences in the
type of oilhence, in the quality of oilalso affect the price. Therefore, both
the type and the location must be fixed.) A random sample of eight
observations from each of four sources of the spot price of a barrel of oil
during February 2007 is collected. ANOVA table for testing whether the
market for crude oil is efficient of not is as follows.
ANOVA
Source
of
Variati
on
Betwe
en

SS

df

MS

F
11.524
81

P-value
4.2694E05

F crit
2.95

Groups
Within
Groups

5.4509
57

Total

What assumptions are necessary for the analysis? Do you believe that all the
assumptions are met in this case? What are the limitations, if any, of this
study? Discuss.
Ans:
ANOV
A
Sourc
e of
Variati
on
Betwe
en
Group
s
Within
Group
s

Total

SS
188.46
37

df

MS

62.821 11.524
3
24
81

152.62
68

28

341.09
05

31

P-value

F crit

4.26594
E-05

2.946685
266

5.4509
57

920. A study was undertaken to assess how both majority and minority
groups perceive the degree of participation of African-American models in
television commercials. The authors designated the three groups in this study
as European Americans, African Americans, and Other. The purpose of this
research was to determine if there were any statistically significant
differences in the average perceptions within these three groups of the extent
of the role played by African-American models in commercials the subjects
viewed. The results of the ANOVA carried out were summarized as F(2, 101) =
921. Research has shown that in the fast-paced world of electronics, the key
factor that separates the winners from the losers is actually how slow a firm is
in making decisions: The most successful firms take longer to arrive at
strategic decisions on product development, adopting new technologies, or
developing new products. Complete the ANOVA Table and draw conclusion at
level= 0.05.
ANOV
A
Source
of
Variati

SS

df

MS

on
Betwee
n
Groups
Within
Groups

51.831
5
5.9180
44

Total

Ans:
ANOVA
Source
of
Variati
on
Betwee
n
Groups
Within
Groups

155.49
45
142.03
31

24

Total

297.52
76

27

SS

df

MS
3

51.831
5
5.9180
44

F
8.758215

923. A study was undertaken to assess the effect of sheer size of a portfolio
(leaving out all other effects, such as degree of diversification) on abnormal
performance, that is, performance of a stock portfolio that is above what one
can expect based on the stock market as a whole. In a four-factor design
based on portfolio size for well diversified portfolios, with 240 data points, the
F statistic was significant at the 1% level of significance. Explain.
Ans: performances of the four different portfolios are significantly different.