QMB 2100 ECONOMIC AND BUSINESS STATISTICS

Computer Project Three

Due Date: November 21^st (at 10:00 AM)

Points Possible: 40

Self-selected groups oftwo students will work together to collect, enter, and analyze stock prices from data collected from the online website,www.barrons.com (click on theStock & Fund Tables link in the Market Data tab). As a group, use the physical mixing techniques discussed in class to generate asimplerandom sample of 70 stocks with the following constraints:

1. Randomly select 50 stocks from the New York Stock Exchange“T” column (stocks that begin with“T”).

2. Randomly select 20 stocks from the NASDAQ“R” column (stocks that begin with“R”).

For each stock, record the Company name as shown in the paper (create a variable calledNAME with at least 15 letters of the company name), the current stock price (called “Close” in the Barrons tables) (create a variable calledCLOSE), the previous 52-week high price (create a variable calledHIGH), the previous 52-week low price (create a variable calledLOW), and the exchange that the stock is traded on (create a variable calledEXCHANGE that is0 if NYSE and1 if NASDAQ). Enter the stock prices that you collect to two decimal places as provided in the Barron’s listing. Enter the stocks selected from both exchanges into a single data set.

The following two pages should be printed and filled out and handed in during class on the due date listed above. Attach the specified printouts to the back of the project that you turn in.Please note, only one project per group should be handed in. Each group member will get the same grade for the project.

Projects can be turned in to QMB 2100 Lab in CIS 2004 anytime they are open. The project is due by 10 AM on Friday, November 21^nd.

Please do not include this page with the project you turn in.

Directions: Fill in the answer to the questions posed below. Attach the specified printouts where indicated and turn in during class (or to the stat lab in CIS 2004) on or before the due date posted at the top of this project.Please give specific interpretations as generic answers will not receive full credit.

1. Create the printout for testing whether the mean closingstock price of all NYSE stocks exceeds $25and attach it here.Answer the following questions regarding this printout:

a. Give the rejection region for this test. You choose ?.

b. In the words of the problem, give a practical conclusion for this test. Make sure to include your choice of ? in this conclusion

c. State what a Type I error would be in the words of this problem.

2. Create the printout for testing whether the mean52-week lowstock price of allNASDAQ stocks differs from$23.50and attach it here.Answer the following questions regarding this printout:

a. State the assumption necessary for this printout to be valid.

b. Use the p-value given in this problem to state the conclusion that you would make in the words of the problem. Make sure you include the value of ? that you select as part of this conclusion.

c. Suppose it was really desired to conduct a one-tailed test instead of the two-tailed test. Use your knowledge of p-values to write in the space below the value of the one-tailed p-value that should be used in the interpretation of the results.

One-tailed p-value = ______________

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

a. 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.

4. Using the entire data set of 70 stocks, count up the number of stocks in your data that have ahigh stock price that is at least $25.State this value here:_______.

Verify this by copying the stem-and-leaf display for the high prices below.

a. State the null and alternative hypotheses that we would use to determine if the true percentage of all high prices that are at least $25 exceeds 40%.

H_o:

H_a:

b.Use the table on the next page to locate the Number of stocks you identified being at least $25 in your sample. Use the table to locate the Test Statistic that you should use for this test.Draw a picture that shows how to calculate the p-value appropriate for this test.To receive full credit, make sure to include the test statistic and the pertinent shaded areas.

c. Was your sample size large enough to conduct the test above? Why or why not? Show your calculations for full credit!

Locate the number of stocks in your sample that have a high stock price that is at least $25. Use the column to the right of that number to identify the Test Statistic you would use for the desired test of hypothesis. Use this Test Statistic in part 4b. to find the p-value that is desired.