The Investment manager of a large investment company believes that the investors invest on average, R85K on any one occasion. To test this belief, the manager commissioned a study, which found that, from a random sample of 132 investors, the average investment was R80.5K. Assume a population standard deviation of R25K and that the investment amounts are approximately normally distributed.
a) Formulate the null and alternate hypothesis for this test situation. (2)
b) Which test statistic (z or t) is appropriate for this test? Why? (2)
c) Conduct a hypothesis test for a single mean at the 5% significance level to support or refute the
manager’s belief. (6)
d) What management conclusion would be drawn from the findings? (1)