Question

A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash compensation of the CEOs of 115 companies, adjusted for inflation, in a recent year. The mean increase in real compensation was x = 6.8%, and the standard deviation of the increases was s = 45%. Is this good evidence that the mean real compensation μ of all CEOs increased that year?

Ho:	μ = 0	(no increase)
Ha:	μ > 0	(an increase)

Because the sample size is large, the sample s is close to the population σ, so take σ = 45%.

(a) Sketch the normal curve for the sampling distribution of x when H_o is true. Shade the area that represents the P-value for the observed outcome x = 6.8%. (Do this on paper. Your instructor may ask you to turn in this work.)

(b) Calculate the P-value. (Round your answer to four decimal places.)

Answer 1

a) The Z value calculated as

hence the normal curve for p-value will be

b) Since the Z value is calculated as

Hence using table shown below P-value is computed as

P-value=0.0526