In exercises that call for two-sample procedures, you may use either of the two approximations for the degrees of freedom that we have discussed: the value given by your software or the smaller of and . Be sure to state clearly which approximation you have used.
7.60 Active companies versus failed companies.
CASE 7.2 Examples 7.14 and 7.15 (pages 390–391) compare active and failed companies under the special assumption that the two populations of firms have the same standard deviation. In practice, we prefer not to make this assumption, so let’s analyze the data without making this assumption. We expect active firms to have a higher cash flow margins. Do the data give good evidence in favor of this expectation? By how much on the average does the cash flow margin for active firms exceed that for failed firms (use 99% confidence)?
cmps