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Accounting

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Investment analysts often use earnings per share (EPS) forecasts. One test of forecasting quality is the zero-mean test, which states that optimal forecasts should have a mean forecasting error of 0 . You have collected data (shown in the table below) for two analysts who cover two different industries: Analyst A covers the telecom industry; Analyst B covers automotive parts and suppliers. a. With as the population mean forecasting error, formulate null and alternative hypotheses for a zero-mean test of forecasting quality. b. For analyst A, use t-test to determine whether to reject the null at the 0.05 levels of significance. c. For analyst B, use t-test to determine whether to reject the null at the 0.05 levels of significance. a. H0:=0 vs. HA:=0 b. Reject the Null Hypothesis t=5.025 c. Reject the Null Hypothesis t=2.44

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