7. (LO 9.4, 9.5) Which has the highest return on investment: the S&P 500, high-grade corporate bonds, or U.S. Treasury bonds? Download the Investment Returns data set from Connect or Additional Student Resources. (Source: http://pages.stern.nyu.
edu/~adamodar/New_Home_Page/datafile/histretSP.html.)
Required 1. Using the Data Analysis ToolPak in Excel, perform a t-test: Two-Sample Assuming Equal Variances between the annual returns on the S&P 500 stock index and Baa (high-grade) corporate bonds. (Hint: Set Hypothesized Mean Difference to 0 (zero)
and alpha at 0.05.) What p-value is associated with the t-test (using a one-tailed test)? Is that p-value less than our established alpha of 0.05? Is one p-value statistically greater than the other (using a one-tailed test)?
2. Using the Data Analysis ToolPak in Excel, perform a t-test: Two-Sample Assuming Equal Variances between the annual returns on the high-grade corporate bonds and U.S.
Treasury bonds. (Hint: Set Hypothesized Mean Difference to 0 (zero) and alpha at 0.05.)
What p-value is associated with the t-test? Is that p-value less than our established alpha of 0.05? Is one p-value statistically greater than the other (using a one-tailed test)?
3. What can you conclude about the returns to these different investments?
4. Given the results above, what would you expect to be the result of a t-test between the S&P 500 stock index and U.S. Treasury bonds?