Business trends and economics applications are often analyzed with the runs test. The accompanying list shows, in

Question:

Business trends and economics applications are often analyzed with the runs test. The accompanying list shows, in order by row, the net gain or loss in the S&P/TSX Composite Index (formerly the TSE 300 Composite Index) over each month in a recent sequence of months. Replace each value by G if it is a gain (above zero) or L if it is a loss (below 0). Then apply the runs test to the resulting sequence of Gs and Ls. What does the result suggest about the pattern of net monthly gains and losses in the index? Given the pattern you have identified, is it possible to make money?

Use the runs test of this section to determine whether the given sequence is random. Use a significance level of Î± = 0.05. (All data are listed in order by row.)