a. Set up the null and alternative hypotheses needed to test whether the mean debt-to-equity ratio for all "target firms" differs from the mean debt-to-equity ratio for all "bidder firms." Test these hypotheses at the .101 .051 .011 and .001 levels of significance. How much evidence is there that these means differ? Explain.
b. Calculate a 95 percent confidence interval for the difference between the mean debt-to-equity ratios for "target firms" and "bidder firms." Interpret the interval.
c. Based on the results of this exercise and Exercise 10.55, does a firm's earnings µer share or the firm's debt-to-equity ratio seem to have the most influence on whether a firm will be a "target" or a "bidder"? Explain.