Solutions Statistics

The 1997 price/earnings ratios for a sample of 12 stocks are shown in the following list (Barron’s

Question: The 1997 price/earnings ratios for a sample of 12 stocks are shown in the following list ( Barron’s, December 8, 1997). Assume that a financial analyst has provided the estimated price/earnings ratio for 1998. Using a .05 level of significance, what is your conclusion about the differences between the price/earnings ratios for 1997 and 1998?

COMPANY	1997 P/E RATIO	1998 P/E RATIO
Coca-Cola	40	32
Du Pont	24	22
Eastman Kodak	21	23
General Electric	30	23
General Mills	25	19
IBM	19	19
McDonalds	20	17
Merck	29	19
Motorola	35	20
Philip Morris	17	18
Walt Disney	33	27
Xerox	20	16