Question

Commercial real estate prices and rental rates suffered substantial declines in 2008 and 2009.† These declines were particularly severe in Asia; annual lease rates in Tokyo, Hong Kong, and Singapore declined by 40% or more. Even with such large declines, annual lease rates in Asia were still higher than those in many cities in Europe. Annual lease rates for a sample of 30 commercial properties in an Asian city showed a mean of $1,118 per square meter with a standard deviation of $230. Annual lease rates for a sample of 40 commercial properties in a European city showed a mean lease rate of $987per square meter with a standard deviation of $195.

b) what is the value of the test statistic? (round your answer to three decimal places)

c) what is the p-value? (round your answer to four decimal places.)

Answer 1

Let be the mean lease rate of commercial properties in Asian city

Let be the mean lease rate of commercial properties in Europe city

Here we have to test that

Assume that the population variances are equal. So we will use here pooled two sample t test.

Test statistic:

where

                       (Round to 4 decimal)

              (Round to 4 decimal)

t = 2.575            (Round to 3 decimal)

Test statistic = 2.575

P value:

Test is one tailed test (right tailed).

Degrees of freedom = n1+n2-2 = 30+40-2 = 68

P value from excel using command:

=T.DIST.RT(2.575,68)

= 0.0061                      (Round to 4 decimal)

P value = 0.0061