Testthenullhypothesis h0 20

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Unformatted text preview: nificance level of α = 0.05, since p‐value > α , the null hypothesis is not rejected. The data supports the company’s claim for the level of return on the investment. A cautious investor may choose a significance level of α = 0.10. Now, p‐value < α , and the decision is to reject the null hypothesis. That is, there is some evidence that the company’s claim may be over‐ optimistic. These conclusions can be confirmed by inspecting the t‐distribution values listed in the Appendix Table. With (n–1) = 9 degrees of freedom: • the 5% critical value is: − t c = − 1.833 , and • the 10% critical value is: − t c = − 1.383 The calculated t‐test statistic of t = − 1.554 lies between these two values to suggest a p‐value somewhere between 5% and 10% – the exact p‐value was calculated above. 18 Chapter 10 A Two‐Sided Alternative or a Two‐Tailed Hypothesis Test Consider a test of the null hypothesis: H0 : μ = a against the alternative hypothesis: H1 : μ ≠ a With a give...
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