Rhonda McLeavon, a quantitative analyst with Churn Brothers Brokerage, has been instructed to perform a statistical analysis to test whether increases in marketing expenses amongst drug companies is positively related to institutional buying of these same companies' common stock. Rhonda begins her analysis and performs the following steps, in succession:
Step 1: Formulating and stating the hypothesis
Step 2: Identifying the appropriate test statistic and probability distribution
Step 3: Specifying the significance level
Step 4: Stating the decision rule
Now that these first four steps have been completed, Ms. McLeavon should proceed with which of the following? Choose the best answer.
Click on the arrows to vote for the correct answer
A. B. C. D. E. F.B
Hypothesis testing involves a series of seven explicit steps:
Step 1: Formulating and stating the hypothesis
Step 2: Identifying the appropriate test statistic and its probability distribution
Step 3: Specifying the significance level
Step 4: Stating the decision rule
Step 5: Collecting the data and performing the necessary calculations
Step 6: Making the statistical decision
Step 7: Making the economic/investment decision.