A financial analyst declares that the average inventory turnover ratio of companies on the Chasen Unicorns 1,000 (CU1K) index is 10. Her supervisor has reservations about the analyst’s claim and takes a sample of 20 companies in the index. The sample is found to have a mean inventory turnover ratio of 11 with a standard deviation of 1.9. Assuming that the inventory turnover ratio is normally distributed, what is the calculated value of the test statistic and should the analyst’s claim that the population average inventory turnover ratio is 10 be rejected at the 10% level of significance? a. 2.3538; claim should not be rejected. b. 2.3538; claim should be rejected. c. 2.1053; claim should not be rejected. d. 2.1053; claim should be rejected. - Dinesh S
Is the answer B?
b) 2.3538; claim should be rejected t = (11-10)/(1.9/(20^1/2)) = 2.35 t-critical = 1.729 for alpha = 0.1 and df = 19 t > t-critical --> reject h0
I also agree with B.
B all the way
B it is guys… all of you right on target!! - Dinesh S