The results of a recent study regarding smoking and three types of illness are shown in the following table.
We are interested in determining whether or not illness is independent of smoking.
a.State the null and alternative hypotheses to be tested.
b.Show the contingency table of the expected frequencies.
c.Compute the test statistic.
d.The null hypothesis is to be tested at 95% confidence.Determine the critical value for this test.What do you conclude?
e.Determine the p-value and perform the test.
Definitions:
EBIT
The financial performance metric, Earnings Before Interest and Taxes, deducts all expenses from a firm's income except for interest and tax expenses.
Return On Equity
A measure of a corporation's profitability, calculated as net income divided by shareholder's equity, indicating how effectively management is using a company’s assets to create profits.
Total Equity
The total of all stockholder's equity (both preferred and common stock) plus retained earnings within a company.
Average Collection Period
A financial metric indicating the average number of days it takes for a firm to receive payments owed by its customers.
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