Considering again the return of your clients’ retirement portfolio described in question 11-15. Recall you had 28 observations for the domestic return series with a standard deviation of 11.21%. Now you decided to investigate whether the return to your client’s retirement portfolio will be enhanced by the addition of foreign equities. You have determined that foreign equities returned 14.54% with a standard deviation of 16.08%

over the same period.

a. Perform a necessary test to assess the validity of assuming that the variances were equal at 1%

significance level.

b. Identify the type of error you might have made in part a and justify your answer.