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
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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