Solution

ID: past-exam-of-the-probability-statistics-and-options-i-course-of-the-university-of-oxford/2008/o/1/iii/solution

Under the null, the two groups share one vector of three category probabilities. The sum-to-one constraint leaves two free parameters. Under the unrestricted alternative, each group has its own such probability vector, leaving four free parameters. The fixed case and control totals introduce no further parameters; the difference is two, giving the chi-squared reference degrees of freedom.

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