Suppose a random variable is hypothesized to be normally distributed with a mean of 0 and a
Question:
Table for Exercise 13.72
Exercise 13.71,
A statistical analysis is to be done on a set of data consisting of 1,000 monthly salaries. The analysis requires the assumption that the sample was drawn from a normal distribution. A preliminary test, called the (2 goodness-of-fit test, can be used to help determine whether it is reasonable to assume that the sample is from a normal distribution. Suppose the mean and standard deviation of the 1,000 salaries are hypothesized to be $1,200 and $200, respectively. Using the standard normal table, we can approximate the probability of a salary being in the intervals listed in the table in the next column. The third column represents the expected number of the 1,000 salaries to be found in each interval if the sample was drawn from a normal distribution with ( = $1,200 and ( = $200. Suppose the last column contains the actual observed frequencies in the sample. Large differences between the observed and expected frequencies cast doubt on the normality assumption.
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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