Question

The Price-to-Book-value ratio is often used by investors to indicate whether a stock’s price is particularly high or low relative to the value of the company. But different market sectors expect different Price/Book values. Here are data on technology companies (biz.yahoo.com/p/8conameu.html accessed in May 2013). We’ll compare applications software companies with manufacturers of peripheral equipment. For both, we have taken the logarithm of the Price/Book ratio to make the distributions more nearly symmetric.
a) State and test appropriate hypotheses and state your conclusion. (So you don’t need to compute that strange degrees of freedom formula, the correct df is 36.)
b) Here are boxplots. What more do they tell you about the distributions? Do you think this changes your conclusions in part a?


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  • CreatedMay 15, 2015
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