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.

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  index and Baa (high-grade) corporate bonds. 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. 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?