2. A financial analyst is testing the performance of four portfolios where two are domestic (A and B) and the other two are foreign (C and D). The average annual returns on each portfolio for the past ten years are listed below: Note: (For each question, clearly define your hypothesis, find the relevant statistics, and statistically declare what your conclusion is.)

Year: 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014

Returns to A: 4.5, 3.8, 4.8, 3.7, 2.1, 3.1, 4.3, 7.9, 6.2, 6.6

Returns to B: 6.8, 5.2, 5.9, 5.7, 3.2, 1.8, 2.9, 8.2, 7.2, 9.1

Returns to C: 3.6, 4.7, 6.5, 3.5, 2.8, 2.2, 3.5, 5.6, 4.2, 5.9

Returns to D: 4.6, 3.2, 5.5, 2.9, 4.8, 4.0, 2.5, 5.3, 3.2, 6.1

Test the hypothesis that the mean returns of all four portfolios are not statistically different from each other.

Does data indicate any one portfolio have a better performance than the others? If so, which portfolio and by how much.

Test whether the recession of 2008 2009 had any effect on the mean returns of the portfolios. If the recession was a significant factor, what was the effect of the recession on return to each portfolio? Note: The great recession happened during 2007M12 2009M6. Since data is annual data, take 2008 and 2009 as the years of recession.

For each portfolio find the mean return during the recession and no-recession periods.

Test whether the portfolios origin (domestic/foreign) had any affect on the average return to portfolios. If so, by how much.