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Statistics for Analytical Decisions- PDF

   

Added on  2021-05-31

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STATISTICS FORANALYTICAL DECISIONSSTUDENT ID:[Pick the date]

Question 1The weekly returns have been computed in the attached excel using the data provided.Question 2The highest relative risk for the stocks and the given index can be compared using thestandard deviation of the weekly returns. As a thumb rule, higher the standard deviation,higher would be the underlying risk since the returns would show higher uncertainty. Thestandard deviation for the given stocks and index is summarised below.From the above, it is apparent that highest relative risk would be for Intel stock consideringthat it has the highest standard deviation.Question 3The requisite computations are shown below.INTL Total number of observation 468Number of weekly return negative 210Probability (weekly return negative)0.4487MSFTTotal number of observation 468Number of weekly return higher than 0.5% (0.005) 229Probability (weekly return >0.005)0.4893Relevant FormulaProbability = Favourable Cases/Total Cases

Question 4Hypothesis test would be carried out here as inference about population needs to be derivedon the basis of the basis of the provided sample.The requisite hypotheses are highlighted below.Null Hypothesis (Ho): μNASDAQ= 0 i.e. mean returns on NASDAQ does not significantlydeviate from 0%Alternative Hypothesis (H1): μNASDAQ≠ 0 i.e. mean returns on NASDAQ do significantlydeviate from 0%The test statistic in the given case would be t since the population standard deviation is notknown. The requisite computation of the test statistic and the relevant p value has beenperformed through excel and the requisite output pasted below.Based on the above output, it is apparent that the p value has come out as 0.0018 which islower than the given significance level of 0.01. Hence, the available evidence is sufficient toreject the null hypothesis and lead to the conclusion that the alternative hypothesis will beaccepted. Hence, it may be concluded that mean returns on NASDAQ tend to deviatesignificantly from 0%.Additionally, another hypothesis test needs to be performed in relation to the mean returns onS&P 500 index.

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