Does the Dow Jones Industrial Average (DJIA) fluctuate randomly from quarter to quarter? (A quarter refers to a quarter of the year. For example, January-March is the first quarter.) A stock analyst selected 40 consecutive quarters and computed the percentage change in the DJIA. He indicated positive percentage changes with a P and negative percentage changes with an N. The following are the results. Conduct a runs test for randomness on the sequence of quarterly market fluctuations at the α = 0.05 level of significance.

Transcribed Image Text:

Return Quarter Return Quarter Quarter Return First, 2005 Third, 2008 First, 2012 Second, 2005 Fourth, 2008 Second, 2012 Third, 2005 First, 2009 Third, 2012 Fourth, 2005 Second, 2009 Fourth, 2012 P P First, 2006 Third, 2009 First, 2013 Fourth, 2009 Second, 2013 Second, 2006 P P First, 2010 Third, 2013 Third, 2006 P Fourth, 2006 Second, 2010 P Fourth, 2013 First, 2007 First, 2014 Third, 2010 P Fourth, 2010 Second, 2007 P P Second, 2014 Third, 2007 First, 2011 Third, 2014 Second, 2011 Fourth, 2014 Fourth, 2007 First, 2008 Third, 2011 Fourth, 2011 Second, 2008