A study on the pay of CEO's examined the percentage increase in cash compensation of the CEO's of 104 companies, adjusted for inflation, in recent years. The mean percentage increase in real compensation was and sample standard deviation of 5.3%. Is this good evidence that the mean percentage increase µ in real compensation of all CEO's is larger than zero?
- Write down the test hypotheses
- Compute the test statistic and the p-value
- Is the result significant at the 5% significance level?
- Compute a 95% Confidence Interval for the mean increase of real compensation of CEO's. Based on this C.I., are you convinced that the mean percentage compensation has been increasing?
- Are you surprised that the results in c) and d) lead to the same conclusions?