A well-known brokerage firm executive claimed that 90% of investors are currently confident of meeting their investment goals. An XYZ Investor Optimism Survey, conducted over a two week period, found that in a sample of 200 people, 81% of them said they are confident of meeting their goals.

Test the claim that the proportion of people who are confident is smaller than 90% at the 0.05 significance level.

The null and alternative hypothesis would be:

A. H_0 : p = 0.9
H_1 : p ≠ 0.9

B. H_0 : p ≥ 0.9
H_1 : p < 0.9

C. H_0 : p = 0.9
H_1 : p ≠ 0.9

D. H_0 : μ ≤ 0.9
H_1 : μ > 0.9

E. H_0 : μ ≥ 0.9
H_1 : μ < 0.9

F. H_0 : μ ≥ 0.9
H_1 : μ < 0.9

The test is:

A. right-tailed

B. left-tailed

C. two-tailed

The test statistic is: ___ (to 3 decimals)

The p-value is: ___ (to 4 decimals)

Based on this we:
A. Fail to reject the null hypothesis
B. Reject the null hypothesis

1 answer

To conduct this statistical test, let's start by identifying the correct hypotheses and test type.

Hypotheses

Since we want to test whether the proportion of people who are confident is smaller than 90%, the appropriate null and alternative hypotheses are:

B. H_0 : p ≥ 0.9
H_1 : p < 0.9

Test Type

Since we are testing if the proportion is less than (i.e., we are evaluating if it has decreased from 90%), the test is:

B. left-tailed

Test Statistic Calculation

We will use the formula for the test statistic for proportions:

\[ z = \frac{\hat{p} - p_0}{\sqrt{\frac{p_0(1 - p_0)}{n}}} \]

Where:

  • \(\hat{p} = 0.81\) (sample proportion)
  • \(p_0 = 0.9\) (hypothesized population proportion)
  • \(n = 200\) (sample size)

Plugging in the values:

  1. Calculate the standard error: \[ SE = \sqrt{\frac{p_0(1 - p_0)}{n}} = \sqrt{\frac{0.9(1 - 0.9)}{200}} = \sqrt{\frac{0.9 \times 0.1}{200}} = \sqrt{\frac{0.09}{200}} \approx \sqrt{0.00045} \approx 0.0212 \]

  2. Now, calculate the z statistic: \[ z = \frac{0.81 - 0.9}{0.0212} \approx \frac{-0.09}{0.0212} \approx -4.245 \]

So, the test statistic is approximately:

Test Statistic: -4.245 (to 3 decimals: -4.245)

P-value Calculation

We will find the p-value corresponding to the calculated z-value in a standard normal distribution. The p-value for a left-tailed test can be found using a standard normal distribution table or calculation.

Looking up \(z = -4.245\), or using a calculator:

\[ p\text{-value} \approx 0.000014 (to 4 decimals: 0.0000) \]

Conclusion

Since the p-value is significantly lower than the significance level \(\alpha = 0.05\), we have sufficient evidence to reject the null hypothesis.

Thus, based on the calculated values:

Final Answers:

Test statistic is: -4.245

p-value is: 0.0000

Based on this we: B. Reject the null hypothesis