Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The data in the accompanying table represent the rate of return of a certain company stock for 11 months, compared with the rate of
The data in the accompanying table represent the rate of return of a certain company stock for 11 months, compared with the rate of return of a certain index of 500 stocks. Both are in percent. Complete parts (a) and (b) below. Click the icon to view the data table. (a) Treating the rate of return of the index as the explanatory variable, x, use technology to determine the estimates of Po and . The estimate of Bo is 2. (Round to four decimal places as needed.) The estimate of B is 2. (Round to four decimal places as needed.) (b) Assuming the residuals are normally distributed, test whether a linear relation exists between the rate of return of the index, x, and the rate of return for the company stock, y, at the a=0.10 level of significance. Choose the correct answer below. State the null and alternative hypotheses. OA. Ho: Po=0 B. Ho: B =0 H: B #0 OC. Ho: Po=0 Clear all Check answer. Rate of Return Month Rates of return of the index, x Apr-07 4.33 Rates of return of the company stock, y 3.38 May-07 3.25 5.09 Jun-07 -1.78 0.54 Jul-07 -3.20 2.88 Aug-07 1.29 2.69 Sept-07 3.58 7.41 Oct-07 1.48 -4.83 Nov-07 -4.40 -2.38 Dec-07 -0.86 2.37 Jan-08 -6.12 -4.27 Feb-08 -3.48 -3.77 C. Ho: B=0 Print Done - The data in the accompanying table represent the rate of return of a certain company stock for 11 months, compared with the rate of return of a certain index of 500 stocks. Both are in percent. Complete parts (a) and (b) below. Click the icon to view the data table. H: Po #0 D. Ho: B =0 H: >0 Determine the P-value for this hypothesis test. P-value=2 (Round to three decimal places as needed.) State the appropriate conclusion at the a = 0.10 level of significance. Choose the correct answer below. OA. Do not reject Ho. There is sufficient evidence to conclude that a linear relation exists between the rate of return of the index and the rate of return of the company stock. B. Do not reject Ho. There is not sufficient evidence to conclude that a linear relation exists between the rate of return of the index and the rate of return of the company stock. OC. Reject Ho. There is not sufficient evidence to conclude that a linear relation exists between the rate of return of the index and the rate of return of the company stock. 'D. Reject Ho. There is sufficient evidence to conclude that a linear relation exists between the rate of return of the index and the rate of return of the company stock.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started