The theory of finance allows for the computation of "excess" returns, either above or below the current stock market average. An analyst wants to determine whether stocks in a certain industry group earn either above or below the market average at a certain time period. The null hypothesis is that there are no excess returns, on the average, in the industry in question. "No average excess returns" means that the population excess return for the industry is zero. A random sample of 24 stocks in the industry reveals a sample average excess return of 0.12 and sample standard deviation of 0.2. State the null and alternative hypotheses, and carry out the test at the α = 0.05 level of significance.
Answer to relevant QuestionsAccording to Fortune, on February 27, 2007, the average stock in all U.S. exchanges fell by 3.3%. If a random sample of 120 stocks reveals a drop of 2.8% on that day and a standard deviation of 1.7%, are there grounds to ...A study of top executives' midlife crises indicates that 45% of all top executives suffer from some form of mental crisis in the years following corporate success. An executive who had undergone a midlife crisis opened a ...Borg-Warner manufactures hydroelectric miniturbines that generate low-cost, clean electric power from the energy in small rivers and streams. One of the models was known to produce an average of 25.2 kilowatts of ...Efforts are under way to make the U.S. automobile industry more efficient and competitive so that it will be able to survive intense competition from foreign automakers. An industry analyst is quoted as saying, "GM is sized ...A recent study was aimed at determining whether people with increased workers' compensation stayed off the job longer than people without the increased benefits. Suppose that the average time off per employee per year is ...
Post your question