Consider the profits of the building materials firms in the Fortune 500, given in Table 16.4.1.
a. Draw a histogram of these profit percentages. Describe the distribution.
b. Find the average and the median. Explain why they are either similar or different.
c. Use the t test to see if the mean profit (for the idealized population of similar firms operating under similar circumstances) is significantly different from the reference value –5% (i.e., a 5% loss). (Use the t test for now, even if you feel it is inappropriate.)
d.* Use the sign test to see whether the median profit of this idealized population differs significantly from a 5% loss.
e. Compare these two testing approaches to this data set. In particular, which of these two tests (t test or sign test) is appropriate here? Are both appropriate? Why?

  • CreatedNovember 11, 2015
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