Stocks
One Thousand Stocks Watched by a Financial Advisory Company

question 45

Short Answer

Stocks
One thousand stocks watched by a financial advisory company are advertised as having an average return-on-equity (ROE)of 11.4 percent and a standard deviation of 3 percent.An inquiry is made by a prospective client who finds that the ROE is supposed to be normally distributed for these stocks.The prospective client obtains a list of the stocks and randomly samples 300 stocks and records the ROE.The results are: $$\begin{array}{l}\text { Re turn-on-Equity }\\\begin{array} { | l | c c | } \hline \text { Category } & \begin{array} { c } \text { Observed } \\\text { Frequency }\end{array} & \begin{array} { c } \text { Expected } \\\text { Frequency }\end{array} \\\hline \text { Under } 6 & 14 & 9.93 \\6 - \text { under } 10 & 92 & 85.83 \\10 - \text { under } 14 & 146 & 146.58 \\14 - \text { under } 18 & 46 & 53.49 \\18 \text { or above } & 2 & 4.17 \\\hline \text { Total } & 300 & 300 \\\hline\end{array}\end{array}$$
-What is the calculated value of the chi-square test statistic?

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Definitions:

Pay Equity

The concept of ensuring equal pay for work of equal value, aimed at eliminating gender and other discriminatory pay gaps.

Common Identity

The shared traits, characteristics, or belonging that unites individuals within a group, fostering a sense of solidarity.

Group Attractiveness

The extent to which a group is considered desirable to join by potential and current members, often due to its prestige, goals, or relationships.

Cohesiveness

The degree to which members of a group or team are united in pursuing common goals and how well they work together.