The below classifies a stock's price change as up, down, or no change for today's and yesterday's prices. Price changes were examined for 100 days. A financial theory states that stock prices follow what is called a "random walk." This means, in part, that the price change today for a stock must be independent of yesterday's price change. Use significant level of 5%, test the hypothesis that daily stock price changes for this stock are independent. 1.
The below classifies a stock's price change as up, down, or no change for today's and yesterday's prices. Price changes were examined for 100 days. A financial theory states that stock prices follow what is called a "random walk." This means, in part, that the price change today for a stock must be independent of yesterday's price change. Use significant level of 5%, test the hypothesis that daily stock price changes for this stock are independent. 1.
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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Transcribed Image Text:1. The below classifies a stock's price change as up, down, or no change for today's and
yesterday's prices. Price changes were examined for 100 days. A financial theory states that stock
prices follow what is called a "random walk." This means, in part, that the price change today for a
stock must be independent of yesterday's price change. Use significant level of 5%, test the
hypothesis that daily stock price changes for this stock are independent.
PRICE CHANGE
TODAY
Select one:
PRICE CHANGE
A. 2.1986
B. 9.488
C. 0.3577
D. 1.2986
PREVIOUS DAY
Up
Up
No Change 6
Down
16
Total
14
Calculate the test statistic for this problem.
No
Change
16
8
14
36 38
Down Total
12
8
26
42
20
38
100
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