CHAPTER 8 PROJECT

SCENARIO 1: PROPORTION TESTING

QUESTIONS

• What test do we use on proportions?
• We use the hypothesis test on proportions to test a claim.

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• What significance level do you choose?
• I chose the significance level .05
• The corresponding critical value for the significance level is 1.96

PROCESS

• I selected every 3rd recorded date until I had 30 data points to use as my sample.

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• Test this claim from Amazon: During the 2014 year, our stock price remained above $380 per share more than 80% of the time.

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• After plugging my data points into my calculator with the "1-prop z-test" and got the following results:
• Prop>.8
• Z=-8.215838363
• P=1
• P hat = .2
• N=30
• Since the p value of 1 is greater than the significance level .05, we fail to reject the null hypothesis

SCENARIO 2: MEAN TESTING (SIGMA KNOWN)

QUESTIONS

• What test do we use on means in this case?
• Z test

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I chose the significance level 0.1 which has the corresponding critical value 1.645

Process
I selected every 3rd recorded date starting from the end of the list until I had 40 data points to use as my sample. After I entered it into list 1 in my calculator, I found the 1-car statistics which revealed that the sigma was 16.80385227

During the 2014 year, our average stock price remained above $350 per share.

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• I used the z-test function on my calculator in order to test the claim and got:
• Mean= 350
• Z= -10.8
• P=1
• X bar= 321.29725
• Sigma: 16.8038522

Since the significance level of .1 is less than the p value 1, we reject the null hypothesis

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• We use the t test for means in this case
• I chose the significance level .01
• The corresponding critical value is 2.575

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Process
I selected the data from every other recorded date starting from the second row until I had 40 different data points to use as my sample and added them into a list in my calculator.

During the 2014 year, our average stock price remained above $350 per share.

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• I used the t-test function on my calculator in order to test the claim and got:
• Mean > 350
• t= -10.75043725
• P=1
• X bar= 321.681
• Standard deviation = 16.66026023
• We reject the null hypothesis

Conclusion:
This project helped in my understanding of null hypothesizes and testing their validity for proportions and means especially since I was gone on most days that it was taught. However, I am still a little confused and I'm not exactly sure if I demonstrated the correct way to test a null hypothesis in this project.