In a contentious shareholder lawsuit, a critical claim by the plaintiffs is that
ID: 3131383 • Letter: I
Question
In a contentious shareholder lawsuit, a critical claim by the plaintiffs is that average CEO tenure for companies of at least $2 billion in marketcap is 9 years. A survey of 30such companies had a sample mean of 7.87 with a sample standard deviation of 6.28. Use this sample to test at the 5% level whether the average CEO tenure is less than 9 years.Do the test by hand (using Minitab just for the p-value) and confirm your results with Minitab. Interpret your results and state your conclusion in terms of the data.
Explanation / Answer
we will use the t test for this question
H0: U=9
Ha:U<9
t test = (x - mean)/(standard dev/sqrt(n))
mean = 9
X = 7.87
STANDARD DEV = 6.28
N = 30
T TEST = (7.87 - 9)/(6.28/SQRT(30))= - 0.99
ALPHA = 0.05
DEGREE OF FREEDOM = 30-1 = 29
P VALUE WILL BE TAKEN FROM T TABLE
= 0.1651
WHICH IS BIGGER THEN 0.05 HENCE THE NULL HYPOTHESIS WILL BE REJECTED.