Answered: An investor is told to invest in a…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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An investor is told to invest in a certain stock if the standard deviation of the returns is below 46%. The returns for the stock in the previous 22 months revealed a mean of 273.4% and a standard deviation of 25.1%. Using a significance level of 10%, should the investor purchase the stock? Assume that the returns are normally distributed.

Complete the following by providing the values requested and selecting the most appropriate option, where applicable.

option 1 : Alternative hypothesis states: population standard deviation > 46

option 2 : Alternative hypothesis states: population variance < 2116

option 3 : Alternative hypothesis states: population variance is not equal to 2116

option 4 : Alternative hypothesis states: population variance < 630.01
What is the critical value for this test?
What is the test statistic for this test?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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