Statistics for Business: Statistical Inference and Simple Regression Analysis

Running head: DATA ANALYSIS 1
Statistics for Business
Institution
Name
Id
Statistical Inference and Simple Regression Analysis

Statistics
Contents
1. Calculations Returns and Jarque- Berra Test.................................................................................3
2. Test of Hypothesis for a Single Population Mean..........................................................................4
3. The F-test: comparing equality of Variances in Two Stocks.........................................................4
4. The ANOVA Test..........................................................................................................................5
5. Excess Returns...............................................................................................................................5
6. Test of Hypothesis Using the Confidence Interval Approach........................................................7
7. Testing for normally Assumptions.................................................................................................7
References.............................................................................................................................................9
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Statistics
1. Calculations Returns and Jarque- Berra Test
The returns for each of the stocks have been calculated using the given formula.
These returns signify the performance of the stocks (Jordan, et al., 2010). Similarly the
Jarque- Berra test of normality has been done.
It has been observed that there is a relationship between risk and return for GD stock
and the BA stock. The BA has a comparatively lower return and higher risk. On the other
hand, GD stocks have a higher average return and a comparatively lower risk level. Hence we
could conclude that lower rates of return attract higher levels of risks. The relationship
between risk and return is outlined in the table below.
average Return Level of Risk
Boeing 1.26 33.91
GD 1.58 20.15
We can check the profitability of these two stocks by comparing their average returns
and the level of risk. We can then tell the most preferred stock that an investor should invest
in. according to this output, GD stocks looks more preferable than Boeing stocks. This is
because it offers a high return with low level of risk (Lind, 2008). Similarly, GD stocks are
also suitable for risk adverse individuals.
Jarque Berra test of normality has been applied in testing whether the returns are
normally distributed (Frankfort-Nachias, 2015). The output of the test is shown below;
Jarque- Berra Test and value
JB Test Statistics P Value
Boeing 9.833 0.7725 7.5966 0.022
GD 9.833 0.0589 0.5796 0.748
The probability value of this test is 0.022 for the BA stocks. This probability is less
than 0.05. Reject the null hypothesis. Conclude that BA stocks are distributed normally. On
the other hand, the probability value for the GD stocks is more than0.05. Fail to reject H0
(Stuart A., 1999). Conclude that the returns on GD stocks are not distributed normally.
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