A Trucking Firm Suspects That the Variance for a Certain $\alpha$

question 90

Essay

A trucking firm suspects that the variance for a certain tire is greater than 1,000,000. To check the claim, the
firm puts 101 of these tires on its trucks and gets a standard deviation of 1200 miles. At α $\alpha$ = 0.05, test the
trucking firmʹs claim.

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Definitions:

Debt-Equity Ratio

A measure of a company's financial leverage, calculated by dividing its total liabilities by shareholder equity.

Residual Dividend Policy

A strategy where companies pay dividends from the remaining earnings after all operational and growth expenses are covered.

After-Tax Earnings

Net income of a business after all taxes have been deducted, indicating the actual profit that remains for shareholders.

Retention Ratio

The proportion of net income that is retained in the company rather than distributed to shareholders as dividends, indicating how much money is reinvested in the business.