Price Earnings
a Comparison of the Price-Earnings (P/E)ratio for the Top

question 132

Short Answer

Price earnings
A comparison of the price-earnings (P/E)ratio for the top and bottom 100 companies in valuation is being prepared.A financial advisor randomly sampled each group to determine whether there is any difference in P/E ratios of the two groups of companies.Let 1 = a top 100 company and 2 = a bottom 100 company.Assume equal population variances and that the populations are normally distributed.The advisor is to use a 0.01 significance level.The data were randomly selected and are summarized below: $$\begin{array} { | c | c | } \hline \text { Top 100 company } & \text { Bottom 100 company } \\\hline n _ { 1 } = 6 & n _ { 2 } = 6 \\\bar { x } _ { 1 } = 18.83 & \bar { x } _ { 2 } = 10.67 \\s _ { 1 } ^ { 2 } = 128.17 & s _ { 2 } ^ { 2 } = 8.67 \\\hline\end{array}$$
-What is the value of the test statistic?
Appropriate test: ____________________
Test statistic = ____________________

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