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Finding the P-Value for Hypothesis Testing

  1. Nov 28, 2014 #1

    Kerrie

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    1. The problem statement, all variables and given/known data
    Suppose a mutual fund qualifies as having moderate risk if the standard deviation of its monthly rate of return is less than 6%. A mutual-fund rating agency randomly selects 28 months and determines the rate of return for a certain fund. The standard deviation of the rate of return is computed to be 5.23%. Is there sufficient evidence to conclude that the fund has moderate risk at the α=0.05 level of significance? A normal probability plot indicates that the monthly rates of return are normally distributed.

    2. Relevant equations
    This homework problem has multi-answers, but I am struggling to find the P-value with Hypothesis Testing when testing a claim about a standard deviation or variance. The homework question (online class) is asking to solve the P-value using technology. I have a TI-84 Plus calculator. I also have StatCrunch (the program within the online course), but not StatDisk.


    3. The attempt at a solution
    I have used the T-Test function in the calculator when testing the mean, but I don't have the mean in this problem to input for the T-Test. Test Statistic is X2 = 20.515 (rounded).

    I understand what the P-value is for, but it seems there are various methods on the calculator to compute it. Is there anyone with knowledge of the TI-84 plus to find the P-value for testing a claim about standard deviations?
     
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  3. Nov 28, 2014 #2

    Ray Vickson

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    The t-distribution is never the correct one to use when testing variance. Do a search on "hypothesis test for variance".
     
  4. Nov 28, 2014 #3

    Kerrie

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    Already looked at various sites, but most of the PDF's require the mean. I'll admit that I have struggled with this statistics course, but I have usually found help by doing an online search. Hoping I can get help here as I am really stuck.
     
  5. Nov 28, 2014 #4

    Ray Vickson

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    The usual test for variance does NOT need to know the mean. I cannot offer more hints until you explain in more detail what you have done already; for example: what tests have you looked at?
     
  6. Nov 28, 2014 #5

    Kerrie

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    I have looked at the Chi-Square Distribution table, but it only has a few areas that don't go below .90. My text gives very little information on calculator functions, I have very diligent notes on my calculator functions, but I cannot find the function to use. I thought the X2 test would work, but the book does not show that test as an option. I can't use the Z interval test, again it needs the mean.
     
  7. Nov 28, 2014 #6

    Kerrie

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    The invNorm also requires the mean.
     
  8. Nov 28, 2014 #7

    Ray Vickson

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    I bet you can find on-line Chi-squared calculators, so using modern tools you can do much more than appears in your book.
     
  9. Nov 28, 2014 #8

    Kerrie

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    Thank you, this little bit of guidance was all I needed. Found one that will at least help with the homework.
     
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