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AN INVESTOR WANTS TO COMPARE THE RISKS ASSOCIATED WITH TWO DIFFERENT STOCKS

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Author: Christine Farr
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Question 1 of 17An investor wants to compare the risks associated with two different stocks. One way to measurethe risk of a given stock is to measure the variation in the stock’s daily price changes.In an effort to test the claim that the variance in the daily stock price changes for stock 1 isdifferent from the variance in the daily stock price changes for stock 2, the investor obtains arandom sample of 21 daily price changes for stock 1 and 21 daily price changes for stock 2.The summary statistics associated with these samples are: n1 = 21, s1 = .725, n2 = 21, s2 = .529.If you compute the test value by placing the larger variance in the numerator, at the .05 level ofsignificance, would you conclude that the risks associated with these two stocks are different?A.No, the test value of 1.879 does not exceed the critical value of 2.46B.No, the p-value associated with this test is 0.0528C.Yes, the p-value associated with this test is 0.0264D.No, the test value of 1.371 does not exceed the critical value of 2.12Reset Selection1.0 PointsQuestion 2 of 17Two independent samples of sizes n1 = 50 and n2 = 50 are randomly selected from twopopulations to test the difference between the population means,distribution of the sample mean difference,. The samplingis:A.normally distributedB.chi-squared distributed with 99 degrees of freedomC.approximately normalD.t - distributed with 98 degrees of freedomReset SelectionQuestion 3 of 17

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