A Portfolio Manager Was Analyzing the Price-Earnings Ratio for This

question 51

True/False

A portfolio manager was analyzing the price-earnings ratio for this year's performance.His boss said that the average price-earnings ratio was 20 for the many stocks,which his firm had traded,but he felt that figure was too high.The portfolio manager randomly selected a sample of 50 P/E ratios and found a mean of 18.17 and standard deviation of 4.60.Assume that the population is normally distributed and test at the 0.01 level of significance.
The decision is: Because the test statistic t = -2.81 falls in the rejection region,reject H0.At the 0.01 level,there is enough statistical evidence to conclude that the alternative hypothesis is true and that the average P/E ratio for the stocks is less than 20.

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Definitions:

MR

Marginal Revenue, the additional income generated from selling one more unit of a good or service.

Units

Basic quantities or measurements, such as meters, seconds, or kilograms, used to express variables.

Consumer Incomes

refers to the total earnings received by consumers, including wages, salaries, benefits, and other income sources, which influence their spending habits and demand for goods and services.

Demand Shift

A change in the quantity demanded at every price due to factors such as consumer preference, income levels, or prices of related goods.