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The American Association of Individual Investors conducts a weekly survey of its members to measure the percentage who are bullish, bearish, and neutral on the stock market for the next six months. For the week ending November 7, 2012, the survey results showed 38.5%38.5 \% bullish, 21.6%21.6 \% neutral, and 39.9%39.9 \% bearish. Consider these results are based on a sample of 300 AAII members.

a. Over the long term, the proportion of bullish AAII members is .39. Conduct a hypothesis test at the 5%5 \% level of significance to see if the current sample results show that bullish sentiment differs from its long-term average of .39. What are your findings?


Answered 10 months ago
Answered 10 months ago
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The goal of this task is to test whether the current proportion of bullish AAII members is significantly different than the long-term average of 0.390.39.

Denote that value with p0=0.39p_0=0.39.

We are given a sample of n=300n=300 AAII members. It turned out that 38.5%38.5\% of them were bullish members. Therefore, the point estimate of the proportion of bullish members in the sample is p=0.385\overline p=0.385.

Denote the current population proportion of bullish members with pp.

What are the hypotheses for this test?

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