Question: Wall Street securities firms paid out record year-end bonuses of $125,500 per employees for 2005. Suppose we would like to take a sample of employees at the Jones &Ryan securities firm to see whether the mean year-end bonus is different from the reported mean of $125,500 for the population.

1. State the null and alternative hypotheses you would use to test whether the year-end bonuses paid by Jones & Ryan were different from the population mean.
2. Suppose a sample of 40 Jones &Ryan employees showed a sample mean year-end bonus of $118,000. Assume a population standard deviation of σ= $30,000 and compute the p-value.
3. With α=.05 as the level of significance, what is your conclusion?
4. Repeat the preceding hypothesis test using the critical value approach.

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