A financial company that acts as a stockbroker is interested in examining the monetary value of the trades it has to process each day. It is known that the value of trades each day follow a Normal distribution for its population distribution, with a mean of £1000 and a standard deviation of £100.

Now the business decides to obtain a new sample of data on the value of trades each day. In the sample of data it has 100 observations, and with a sample mean of £800. The firm wishes to perform a hypothesis test on the population mean to test if the population mean has changed, based on this sample of data.

a)Based on the requirements of the firm, formally state the hypothesis that the firm wants to undertake, and give your reason. Also what is the advantage of a 1 sided hypothesis test compared to a 2 sided hypothesis test?

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a Formulating the Hypothesis The firm wants to perform a hypothesis test on the population mean to d... View the full answer