Question: What assumptions did you use when solving problems I through II? What assumptions did you not make about the populations in question? Explain.
Problems I: With the continuing surge in the number of mergers and acquisitions in 2007, research effort has been devoted to determining whether the size of an acquisition has an effect on stockholders' abnormal returns (in percent) following the announcement of an impending acquisition.12 Given the data below about abnormal stockholder returns for three size groups of acquired firms, test for equality of mean abnormal return.
Large: 11.9, 13.2, 8.7, 9.8, 12.1, 8.8, 10.3, 11.0
Medium: 8.6, 8.9, 5.3, 4.1, 6.2, 8.1, 6.0, 7.1
Small: 5.2, 4.1, 8.8, 10.7, 12.6, 13.0, 9.1, 8.0
Problems II: According to an article in Risk, three Danish financial institutions recently offered new structured investment programs.15 Suppose that data, in percent return, for a random sample of investments offered by these banks, are as follows.
Bank 1: 8.5, 7.9, 8.3, 8.2, 8.2, 7.7, 8.1, 7.9
Bank 2: 6.8, 7.1, 6.6, 7.3, 7.5, 6.9, 7.7, 8.0
Bank 3: 5.9, 6.0, 6.1, 5.8, 7.3, 5.9, 6.5, 6.3
Conduct a test for equality of means and state your conclusions.