Socially conscious investors screen out stocks of alcohol andtobacco makers, firms with poor environmental records, andcompanies with poor labor practices. Some examples of "good,"socially conscious companies are Johnson and Johnson, DellComputers, Bank of America, and Home Depot. The question is, aresuch stocks overpriced? One measure of value is the P/E, orprice-to-earnings ratio. High P/E ratios may indicate a stock isoverpriced. For the S&P Stock Index of all major stocks, themean P/E ratio is ? = 19.4. A random sample of 36 "sociallyconscious" stocks gave a P/E ratio sample mean of x = 17.5, withsample standard deviation s = 5.8. Does this indicate that the meanP/E ratio of all socially conscious stocks is different (eitherway) from the mean P/E ratio of the S&P Stock Index? Use ? =0.05. (a) What is the level of significance? State the null andalternate hypotheses. H0: ? = 19.4; H1: ? ? 19.4 H0: ? = 19.4; H1:? > 19.4 H0: ? > 19.4; H1: ? = 19.4 H0: ? ? 19.4; H1: ? =19.4 H0: ? = 19.4; H1: ? < 19.4 (b) What sampling distributionwill you use? Explain the rationale for your choice of samplingdistribution. The standard normal, since the sample size is largeand ? is unknown. The Student's t, since the sample size is largeand ? is unknown. The standard normal, since the sample size islarge and ? is known. The Student's t, since the sample size islarge and ? is known. What is the value of the sample teststatistic? (Round your answer to three decimal places.) (c)Estimate the P-value. P-value > 0.250 0.100 < P-value <0.250 0.050 < P-value < 0.100 0.010 < P-value < 0.050P-value < 0.010 Sketch the sampling distribution and show thearea corresponding to the P-value. WebAssign Plot WebAssign PlotWebAssign Plot WebAssign Plot (d) Based on your answers in parts(a) to (c), will you reject or fail to reject the null hypothesis?Are the data statistically significant at level ?? At the ? = 0.05level, we reject the null hypothesis and conclude the data arestatistically significant. At the ? = 0.05 level, we reject thenull hypothesis and conclude the data are not statisticallysignificant. At the ? = 0.05 level, we fail to reject the nullhypothesis and conclude the data are statistically significant. Atthe ? = 0.05 level, we fail to reject the null hypothesis andconclude the data are not statistically significant. (e) Interpretyour conclusion in the context of the application. There issufficient evidence at the 0.05 level to conclude that the mean P/Eratio of all socially conscious stocks differs from the mean P/Eratio of the S&P Stock Index. There is insufficient evidence atthe 0.05 level to conclude that the mean P/E ratio of all sociallyconscious stocks differs from the mean P/E ratio of the S&PStock Index.