Test the hypothesis at the 001 level that the distribution o

Test the hypothesis at the 0.01 level that the distribution of stocks is 11%, 24%, 30%, 24%, 11% respectively from the smallest dollar amount to the largest dollar amount. Use the 5 step presented in the text. Step 1 H0 H1= Step 2: critical value = Step 3: chi squared value = Step 4 make decision to reject or failure to reject. Step 5 Summarize the results

State the hypotheses. The first step is to state the null hypothesis and an alternative hypothesis.

H₀: The data follow a specified distribution
H_a: The data do not follow the specified distribution.

Step 2) alpha = 0.01

df = k - 1 = 5 - 1 = 4

k = number of levels of the categorical variable

Critical value for alpha = 0.01 and df 4 = 0.297 (From table or calculator)

Step 3) Chi squared value = ² = [ (O_i - E_i)² / E_i ]

O_i = Observed frequency

E_i = Expected frequency

² = [ (0.11 - 5 * 0.11)² + (0.24 - 5 * 0.24)² + (0.3 - 5 * 0.3)² + (0.24 - 5 * 0.24)² + (0.11 - 5 * 0.11)² ] / [5 * 0.11 + 5 * 0.24 + 5 * 0.3 + 5* 0.24 + 5 * 0.11]

= 0.7341

Step 4) Since test stat > critical value we reject the null hypothesis

5) We conclude that the data do not follow the specified distribution.

Test the hypothesis at the 0.01 level that the distribution of stocks is 11%, 24%, 30%, 24%, 11% respectively from the smallest dollar amount to the largest dol

Test the hypothesis at the 001 level that the distribution o

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