Refer to the Financial Analysts Journal (July/August 2008) study of earnings forecasts of buy-side and sell-side analysts, Exercise 2.86 (p. 88). Recall that data were collected on 3,526 forecasts made by buy-side analysts and 58,562 forecasts made by sell-side analysts, and the relative absolute forecast error was determined for each. A positive forecast error indicates that the analyst is overestimating earnings, while a negative forecast error implies that the analyst is underestimating earnings. Summary statistics for the forecast errors in the two samples are reproduced in the table below.

a. Conduct a test (at α = .01) to determine if the true mean forecast error for buy-side analysts is positive. Use the observed significance level (p-value) of the test to make your decision and state your conclusion in the words of the problem.
b. Conduct a test (at α = .01) to determine if the true mean forecast error for sell-side analysts is negative. Use the observed significance level (p-value) of the test to make your decision and state your conclusion in the words of the problem.

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Buy-Side Analysts 0.85 1.93 Sell-Side Analysts -0.05 Mean Standard Deviation 0.85