Socially conscious investors screen out stocks of alcohol and tobacco makers, fi
ID: 3222913 • Letter: S
Question
Socially conscious investors screen out stocks of alcohol and tobacco makers, firms with poor environmental records, and companies with poor labor practices. Some exam of "good, " socially conscious companies are Johnson and Johnson, Dell Computers, Bank of America, and Home Depot. The question is, are such stocks overpriced? One measure of value is the P/E, or price-to-earnings ratio. High P/E ratios may indicate a stock is overpriced. For the S&.P Stock Index of all major stocks, the mean P/E ratio i: 19.4. A random sample of 31 "socially conscious" stocks gave a P/E ratio sample mean of x = 18.2, with sample standard deviation s = 6.0. Does this indicate that the me. P/E ratio of all socially conscious stocks is different (either way) from the mean P/E ratio of the S&P; Stock Index? Use alpha = 0.01. (a) What is the level of significance? .01 State the null and alternate hypotheses. H_0: mu = 19.4; H_1: mu > 19.4 H_0: mu notequalto 19.4; H_1: mu = 19.4 H_0: mu = 19.4; H_1: mu 19.4; H_1: mu = 19.4 H_0: n = 19.4; H_1:mu notequalto 19.4 (b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution. The standard normal, since the sample size is large and sigma is known. The Student's t, since the sample size is large and sigma is unknown. The standard normal, since the sample size is large and sigma is unknown. The Student's t, since the sample size is large and sigma is known. What is the value of the sample test statistic? -1.113552873 (c) Find the P-value. (Round your answer to four decimal places.)Explanation / Answer
from above as it is two tailed test ; fro 30 degree of freedom and above calulated test stat
p value =0.2743
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