The Sample Standard Deviation of the Monthly Sales (In Thousands

question 110

Essay

The sample standard deviation of the monthly sales (in thousands of dollars) of a telecommunications firm in the United States for two years, 2010 and 2011, is computed as 6.7. Assuming that the sales data are drawn from a normally distributed population, conduct the following hypothesis tests for the population variance. Use the critical value approach at α = 0.05.
A) H₀: σ² ≤ 25, H_A: σ² > 25
B) H₀: σ² = 36, H_A: σ² ≠ 36

• A) H₀: σ² ≤ 25, H_A: σ² > 25
• B) H₀: σ² = 36, H_A: σ² ≠ 36

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Definitions:

Stock Market

A marketplace where securities, such as stocks and bonds, are bought and sold.

Average Collection Period

The mean period it takes for an enterprise to collect payments due from its clients.

Financial Statements

Official records that detail a company’s financial activities and condition, including balance sheet, income statement, and cash flow statement.

Stock Market

A marketplace where stocks (shares in corporations) are bought and sold, providing companies with access to capital and investors with a slice of ownership and potential profits.