One measure of the value of a stock is its price to earnings ratio (or P/E ratio):

Question:

One measure of the value of a stock is its price to earnings ratio (or P/E ratio): the ratio of the price of a stock per share to the earnings per share and can be thought of as the price an investor is willing to pay for $1 of earnings in a company. A stock analyst wants to know whether the P/E ratios for three industry categories differ significantly. The following data represent simple random samples of companies from three categories: (1) financial, (2) food, and (3) leisure goods.

Leisure Goods Financial Food 8.83 14.10 19.75 17.87 10.12 12.75 13.48 15.18 15.57 14.42 22.84 13.48 10.06 15.60 11.27

(a) Test the null hypothesis that the mean P/E ratio for each category is the same at the a = 0.05 level of significance.
(b) If the null hypothesis is rejected in part (a), use Tukey's test to determine which pairwise means differ using a familywise error rate of a = 0.05.
(c) Draw boxplots of the three categories to support the analytic results obtained in parts (a) and (b).

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: