Anderson is considering to invest in two stocks X and Y. He has sampled the monthly...

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Anderson is considering to invest in two stocks X and Y. He has sampled the monthly returns (%) of the stocks as shown in the table. X (%) 8.8 9.6 8.4 9.0 Y (%) 9.2 9.4 8.9 9.6 8.3 9.2 9.0 8.7 8.5 9.4 9.7 8.4 8.8 8.9 9.0 9.7 If the stock returns are normally distributed and the two samples are independent, answer the following questions assuming a-5%. (Note: State the hypotheses and report the p-value of the underlying test statistic used in each question.) (a) Using the variance as a measure of risk, test if stock X is less risky than stock Y. (2 marks) (b) Test if the expected return of stock X is lower than that of stock Y. Anderson is considering to invest in two stocks X and Y. He has sampled the monthly returns (%) of the stocks as shown in the table. X (%) 8.8 9.6 8.4 9.0 Y (%) 9.2 9.4 8.9 9.6 8.3 9.2 9.0 8.7 8.5 9.4 9.7 8.4 8.8 8.9 9.0 9.7 If the stock returns are normally distributed and the two samples are independent, answer the following questions assuming a-5%. (Note: State the hypotheses and report the p-value of the underlying test statistic used in each question.) (a) Using the variance as a measure of risk, test if stock X is less risky than stock Y. (2 marks) (b) Test if the expected return of stock X is lower than that of stock Y.

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To test if stock X is less risky than stock Y using the variance as a measure of risk we can perform a twosample Ftest Here are the steps to conduct t... View the full answer