Profit Margin
An investor is considering two types of investment.She is quite satisfied that the expected profit margin on Investment 1 is higher than the expected profit margin on Investment 2.However,she is quite concerned that the risk associated with Investment 1 is higher than that of Investment 2.To help make her decision,she randomly selects seven monthly profit margins on investment 1 and ten monthly profit margins on investment 2.She finds that the sample variances of Investments 1 and 2 are 225 and 118,respectively.
-{Profit Margin Narrative} Can she infer at the 5% significance level that the population variance of investment 1 exceeds that of investment 2?
Correct Answer:
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. Rejection region: F > F.05,6,9 = 3.37 Test s...View Answer
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