Calculate the return on equity (ROE) for a sample of 20 banks for the year before the Sarbanes-Oxley Act was enacted. For the same sample of banks, calculate the ROE for the year following the enactment of the Sarbanes-Oxley Act.
In the banking industry, the return on equity ratio or percentage is used to evaluate the financial performance of a bank. Such information is extremely valuable to investors.
Calculate the return on equity (ROE) for a sample of 20 banks for the year before the Sarbanes-Oxley Act was enacted. For the same sample of banks, calculate the ROE for the year following the enactment of the Sarbanes-Oxley Act.
Later, answer the following questions:
- After the enactment of the Sarbanes-Oxley Act, was the average bank’s ROE lower than it was before the act? If so, why do you think that was the case?
- What is the null hypothesis for this hypothesis test?
- What is the alternative hypothesis for this hypothesis test?
- Choose at least three different significant levels to conduct the hypothesis test. Is it possible that a Type I error occurred with the hypothesis test? Why or why not?
- Is it possible that a Type II error occurred? Why or why not?
Submit your answers in an eight- to ten-page Word document.
Submit it to the W3: Assignment 2 Dropbox by the end of Tuesday, February 3, 2015.
Name your document SUO_BUS3059_W3_A2_LastName_FirstInitial.doc.
On a separate page, cite all sources using the APA guidelines.
Assignment 2 Grading Criteria | Maximum Points |
---|---|
Analyzed and explained if the average bank’s ROE was lower after the enactment of the Sarbanes-Oxley Act than it was before the act. Explained the reason for it. |
50
|
Analyzed and explained the null hypothesis for this hypothesis test. |
30
|
Analyzed and explained the alternative hypothesis for this hypothesis test. |
30
|
Analyzed and explained whether or not a Type I error occurred with the hypothesis test. |
30
|
Analyzed and explained whether or not a Type II error occurred with the hypothesis test. |
30
|
Used correct spelling, grammar, and professional vocabulary. Cited all sources using the APA guidelines. |
30
|
Total |
200
|