Question

A trader claims that the proportion of stocks that offer dividends is different from 0.14. If the trader wants to conduct a hypothesis test, should they use a left-, right-, or two-tailed hypothesis test to analyze whether the proportion of stocks that offer dividends is different from 0.14? Select the correct answer below: Left-tailed test Right-tailed test Two-tailed test

Answer 1

Answer:

The correct option is;

Two-tailed test

Step-by-step explanation:

From the interpretation of the question statement, the trader wants to conduct a hypothesis test on the trader's claim that the proportion of stocks that offer dividends is different from 0.14

Given that the difference is hypothesized, then the null hypothesis, H₀ and the alternative hypothesis, H₁ should be written as follows;

H₀: Null hypothesis (no difference, or no change)

H₁: μ ≠ μ₀ which is hypothesizing  difference which is known as a two-tailed test

The confidence level is then selected and the test statistic is calculated