Question

3. Create the printout for testing whether the mean closing price of all NYSE stocks differs from the mean closing price of all NASDAQ stocks and attach it here. Answer the following questions regarding this printout:

Student Edition of Statistix 10.0                          4/21/2020, 5:32:15 AM Two-Sample T Tests for Close by Exchange Exchange           N         Mean       SD        SE 0          40         51.664   73.709   11.654 1          25         19.368   18.703   3.7406 Difference                    32.296   59.131   15.076 T-Tests for Mean Difference Null Hypothesis: difference = 0 Alternative Hyp: difference ≠ 0                                                                   Lower    Upper Method Variances           DF         T            P      95% C.I. 95% C.I. Pooled   Equal    63       2.14      0.0360   2.1702 62.423 Satterthwaite      Unequal 46.6      2.64      0.0113   7.6679 56.925 Homogeneity of Variances    DF         F            P Folded F Test     39,24    15.53    0.0000 Cases Included 65    Missing Cases 0 Cases Included 65    Missing Cases 0

1. State the assumptions necessary for this printout to be valid. (You don’t need to state that the samples were randomly and independently selected. We know that they were from part 1 of the project!)

b.   Use the confidence interval to make a statement regarding the relationship between the population means. Make sure to include your confidence level in your statement

Answer 1

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ANSWERS

a)

Assumptions:

• Both Populations of closing price of all NYSE stocks and closing price of all NASDAQ stocks follows Normal distribution
• Both Populations have equal variance

Note: Normality is a must assumption. Equal variance assumption is a must for t test , if it fails we can conduct a Welch-Satterthwaite T-Test.

Here equal variance assumption failed since Folded F Test p value is 0. So we must use Welch-Satterthwaite T-Test for inference about Population means

b)

From the given Satterthwaite test we have 95 % confidence Interval for Population mean difference is (7.6679 , 56.925).

Statement : At 95% confidence level we say that Population mean closing price of all NYSE stocks differs from the Population mean closing price of all NASDAQ stocks

Reason for this statement is that our confidence interval doesn't cover zero. If zero covers , then we just reverse the statement