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Answer: Buy-side vs. sell-side analysts’ earnings

Statistics for Business and Economics | 12th Edition | ISBN: 9780321826237 | Authors: James T. McClave, P. George Benson, Terry T Sincich ISBN: 9780321826237 51

Solution for problem 17E Chapter 8

Statistics for Business and Economics | 12th Edition

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Statistics for Business and Economics | 12th Edition | ISBN: 9780321826237 | Authors: James T. McClave, P. George Benson, Terry T Sincich

Statistics for Business and Economics | 12th Edition

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Problem 17E

Problem 17E

Buy-side vs. sell-side analysts’ earnings forecasts. Refer to the Financial Analysts Journal (Jul./Aug. 2008) study of financial analysts’ forecast earnings, Exercise 2.86 (p. 86). Recall that data were collected on 3,526 forecasts made by buy-side analysts and 58,562 forecasts made by sell-side analysts, and the relative absolute forecast error was determined for each. The mean and standard deviation of forecast errors for both types of analysts are given in the table.

a. Construct a 95% confidence interval for the difference between the mean forecast error of buy-side analysts and the mean forecast error of sell-side analysts.

b. Based on the interval, part a, which type of analysis has the greater mean forecast error? Explain.

c. What assumptions about the underlying populations of forecast errors (if any) are necessary for the validity of the inference, part b?

Step-by-Step Solution:

Solution:

Step 1 of 4:

We have the mean and standard deviation of the Buy-side vs. sell-side analyst’s earnings forecasts.

                                     Buy-Side Analysts     Sell-Side Analysts

Sample size

3,526

58,562

Mean

0.85

-0.05

Standard Deviation

1.93

0.85


Step 2 of 4

Chapter 8, Problem 17E is Solved
Step 3 of 4

Textbook: Statistics for Business and Economics
Edition: 12
Author: James T. McClave, P. George Benson, Terry T Sincich
ISBN: 9780321826237

This full solution covers the following key subjects: analysts, forecast, SIDE, mean, Error. This expansive textbook survival guide covers 15 chapters, and 1631 solutions. The answer to “Buy-side vs. sell-side analysts’ earnings forecasts. Refer to the Financial Analysts Journal (Jul./Aug. 2008) study of financial analysts’ forecast earnings, Exercise 2.86 (p. 86). Recall that data were collected on 3,526 forecasts made by buy-side analysts and 58,562 forecasts made by sell-side analysts, and the relative absolute forecast error was determined for each. The mean and standard deviation of forecast errors for both types of analysts are given in the table. a. Construct a 95% confidence interval for the difference between the mean forecast error of buy-side analysts and the mean forecast error of sell-side analysts.b. Based on the interval, part a, which type of analysis has the greater mean forecast error? Explain.c. What assumptions about the underlying populations of forecast errors (if any) are necessary for the validity of the inference, part b?” is broken down into a number of easy to follow steps, and 134 words. Since the solution to 17E from 8 chapter was answered, more than 791 students have viewed the full step-by-step answer. Statistics for Business and Economics was written by and is associated to the ISBN: 9780321826237. This textbook survival guide was created for the textbook: Statistics for Business and Economics , edition: 12. The full step-by-step solution to problem: 17E from chapter: 8 was answered by , our top Business solution expert on 07/21/17, 05:42AM.

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Answer: Buy-side vs. sell-side analysts’ earnings