Your investment executive claims that the average yearly rat

Your investment executive claims that the average yearly rate of return on the stocks she recommends is at least

10.0%. You plan on taking a sample to test her claim. The correct set of hypotheses is

a. H0: < 10.0% Ha: 10.0%

b. H0: 10.0% Ha: > 10.0%

c. H0: > 10.0% Ha: 10.0%

d. H0: 10.0% Ha: < 10.0%

Solution

Answer: d. H0: 10.0% Ha: < 10.0%

Reason:

Null hypothesis always consists of the equality sign. Testing the claim that returns is \"at least\" 10% means that null hypothesis involves the >= sign. The compliment of this sign is > sign, which is included in the alternate hypothesis.