Problem Set 3 Use the data below to answer all of the questions. 1. (33 pts) Compute average federal funds rate over the time perios. 1.37 Compute the average value for the inflation Indexed security 0.99 5 2. (33 pts) Calculate a 95% confidence interval around the averages you calculated in #1 7 8 9 20 21 22 23 3. (34 pts) The financial crisis that hit in 2008 altered the economic landscape. 24 Using January 1, 2008 as the cutoff, compare the average federal funds rate in the two time periods to see if they were significantly different. Conduct this test using a t-test and a 95% confidence level. Identify your null and alternative hypotheses Do the same thing for the inflation indexed securities. 25 26 27 28 29 30 31 32 33 Null hypothesis: Ho Alternative Hypothesis T-test: Degrees of freddom 35 36 37 38 39 40 observation_date Federal Funds Rate Inflation Indexed Security 2003-01-01 1.24 2.29 2003-02-01 1.26 1.99 2003-03-01 1.25 1.94 2003-04-01 1.26 2.18 2003-05-01 1.26 1.91 2003-06-01 1.22 1.72 2003-07-01 1.01 2.11 2003-08-01 1.03 2.32 2003-09-01 1.01 2.19 2003-10-01 1.01 2.08 2003-11-01 1.00 1.96 2003-12-01 0.98 1.98 2004-01-01 1.00 1.89 2004-02-01 1.01 1.76 2004-03-01 1.00 1.47 2004-04-01 1.00 1.90 2004-05-01 1.00 2.09 2004-06-01 103 2:15 2004-07-01 1.26 2.02 2004.01 TAR 42 43 44 45 46 47 48 6 E D H F G A 49 50 51 52 53 54 55 56 57 SB 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 B 2004-08-01 2004-09-01 2004-10-01 2004-11-01 2004-12-01 2005-01-01 2005-02-01 2005-03-01 2005-04-01 2005-05-01 2005-06-01 2005-07-01 2005-08-01 2005-09-01 2005-10-01 2005-11-01 2005-12-01 2006-01-01 2006-02-01 2006-03-01 2006-04-01 2006-05-01 2006-06-01 2006-07-01 2006-08-01 2006-09-01 2006-10-01 2006-11-01 2006-12-01 2007-01-01 2007-02-01 2007-03-01 2007-04-01 2007-05-01 2007-06-01 2007-07-01 2007-08-01 2007-09-01 2007-10-01 2007-11-01 2007-12-01 2008-01-01 2008-02-01 2008-03-01 2008-04-01 2008-05-01 2008-06-01 2008-07-01 2008-08-01 Shent1 1.43 1.61 1.76 1.93 2.16 2.28 2.50 2.63 2.79 3.00 3.04 3.26 3.50 3.62 3.78 4.00 4.16 4.29 4.49 4.59 4.79 4.94 4.99 5.24 5.25 5.25 5.25 5.25 5.24 1.86 1.80 1.73 1.68 1.67 1.72 1.63 1.79 1.71 1.65 1.67 1.88 1.89 1.70 1.94 2.06 2.12 2.01 2.05 2.20 2.41 2.45 2.53 2.51 2.29 2.32 2.41 2.29 2.25 2.44 2.36 2.18 2.26 2.37 2.69 2.64 2.44 2.26 2.20 1.77 1.79 1.47 1.41 1.09 1.36 1.46 1.63 77 5.25 5.26 5.26 5.25 5.25 78 79 80 81 82 B3 84 85 B6 87 88 89 90 91 92 93 94 95 96 97 5.25 5.26 5.02 4.94 4,76 4.49 4.24 3.94 2.98 2.61 2.28 1.98 2.00 2.01 2.00 1.68 A B D E F G H 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 2.00 1.81 0.97 0.39 0.16 0.15 0.22 0.18 0.15 0.18 0.21 0.16 0.16 0.15 0.12 0.12 0.12 1.68 1.85 2.75 2.89 2.17 1.91 1.75 1.71 1.57 1.72 1.86 1.82 1.77 1.64 1.48 1.28 1.36 1.37 1.42 1.51 1.50 1.31 1.26 1.24 1.02 0.91 0.53 0.67 1.04 1.06 1.24 0.96 0.86 0.78 0.75 115 116 2008-08-01 2008-09-01 2008-10-01 2008-11-01 2008-12-01 2009-01-01 2009-02-01 2009-03-01 2009-04-01 2009-05-01 2009-06-01 2009-07-01 2009-08-01 2009-09-01 2009-10-01 2009-11-01 2009-12-01 2010-01-01 2010-02-01 2010-03-01 2010-04-01 2010-05-01 2010-06-01 2010-07-01 2010-08-01 2010-09-01 2010-10-01 2010-11-01 2010-12-01 2011-01-01 2011-02-01 2011-03-01 2011-04-01 2011-05-01 2011-06-01 2011-07-01 2011-08-01 2011-09-01 2011-10-01 2011-11-01 2011-12-01 2017-01-01 2012-02-01 2012-03-01 2012-04-01 2012-05-01 2012-06-01 2012-07-01 117 115 119 120 121 122 124 126 129 130 0.11 0.13 0.16 0.20 0.20 0.18 0.18 0.19 0.19 0.19 0.19 0.18 0.17 0.16 0.14 0.10 0.09 0.09 0.07 0.10 0.08 0.07 0.08 0.07 0.08 0.10 0.13 0.14 0.16 0.16 016 132 136 135 136 0.14 0.08 0.19 0.00 0.03 0.11 025 140 140 142 0.21 140 50 Sheett n
