The “beta coefficient” of a stock is a measure of the stock’s volatility (or risk) relative to themarket as a whole. Stock with beta coefficients greater than 1 generally bear greater risk(more volatility) than the market, whereas stocks with beta coefficients less than 1 are lessrisky (less volatile) than the overall market. A random sample of 15 high-technology stockswas selected at the end of 2007, and the mean and standard deviation of the betacoefficients were calculated: sample mean, X = 1.23, sample standard deviation, S=.37 A. Set up the appropriate null hypothesis and alternate hypothesis to test whether the average high technology stock is riskier than the market as a whole. B. Find the appropriate test statitistic and rejection region for the test. Use a=0.1 C. Calculate the value of the test statistic and state your conclusion
The “beta coefficient” of a stock is a measure of the stock’s volatility (or risk) relative to themarket as a whole. Stock with beta coefficients greater than 1 generally bear greater risk(more volatility) than the market, whereas stocks with beta coefficients less than 1 are lessrisky (less volatile) than the overall market. A random sample of 15 high-technology stockswas selected at the end of 2007, and the mean and standard deviation of the betacoefficients were calculated: sample mean, X = 1.23, sample standard deviation, S=.37
A. Set up the appropriate null hypothesis and alternate hypothesis to test whether the average high technology stock is riskier than the market as a whole.
B. Find the appropriate test statitistic and rejection region for the test. Use a=0.1
C. Calculate the value of the test statistic and state your conclusion
D. What is the appropriate ange of p-value associate with this test? Interpret it.
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