Anita Cruz recently assumed responsibility for a large investment portfolio. She wonders whether industry sector influences investment objective. Her staff prepared the following contingency table from a random sample of 200 common stocks: Using $\alpha$ =.01, appropriate decision is ___.
A) reject the null hypothesis and conclude the two variables are not independent
B) reject the null hypothesis and conclude the two variables are independent
C) do not reject the null hypothesis and conclude the two variables are not independent
D) do not reject the null hypothesis and conclude the two variables are independent
E) do nothing

Question

Anita Cruz recently assumed responsibility for a large investment portfolio. She wonders whether industry sector influences investment objective. Her staff prepared the following contingency table from a random sample of 200 common stocks:  Using $\alpha$ =.01, appropriate decision is ___.
A) reject the null hypothesis and conclude the two variables are not independent 
B) reject the null hypothesis and conclude the two variables are independent 
C) do not reject the null hypothesis and conclude the two variables are not independent 
D) do not reject the null hypothesis and conclude the two variables are independent 
E) do nothing

Quizplus · Accepted Answer

The appropriate decision at the significance level of 0.01 (α=0.01) is to reject the null hypothesis and conclude that the two variables (industry sector and investment objective) are not independent. This is because the calculated value of chi-squared is greater than the critical value at the given level of significance.

Anita Cruz Recently Assumed Responsibility for a Large Investment Portfolio α\alphaα

Anita Cruz Recently Assumed Responsibility for a Large Investment Portfolio $\alpha$