Aimed at finding substantial earnings decreases, a random sample of 23 firms with substantial earnings decreases showed that the mean return on assets 3 years previously was 0.058 and the sample standard deviation was 0.055. An independent random sample of 23 firms without substantial earnings decreases showed a mean return of 0.146 and a standard deviation 0.058 for the same period. Assume that the two population distributions are normal with equal standard deviations.
Test, at the 5% level, the null hypothesis that the population mean returns on assets are the same against the alternative that the true mean is higher for firms without substantial earnings decreases.

  • CreatedJuly 07, 2015
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