One way to measure risk in the stock market is by use of the standard deviation of the return of a particular investment or group of investments. A lower standard deviation is considered to represent a lower risk. The stock market has many indices to measure its performance. One particular index is the S&P 500, an index that measures the performance of the 500 largest firms in America. From January 1, 1975 to December 31, 1999 this benchmark had a standard deviation of 13.26%. You believe that since 9/11 the risk associated with stock market investments has increased. The return on the S&P since 9/11 has been:
Year: Annual % Return
2000: -10.14
2001: -13.04
2002: -23.37
2003: 26.39
2004: 9.00
2005: 3.01
I need help setting up this problem. It's the last one, thanks for those that have been helping me! I need help figuring out the type of test to use and the critical value for the test statistic. Can anyone start me off?
2007-05-09 03:48:14 · 1 answers · asked by averiex 2 in Science & Mathematics ➔ Mathematics
Sorry, I need step by step instructions, not websites. Had I needed a website, I would have used one of the many on the web. I can't follow along with them.
2007-05-09 04:18:21 · update #1
Essentially you want to test the hypothesis that the standard deviation has increased.
Check out the site below to see how you can use the chi squared test to do this.
2007-05-09 04:03:27 · answer #1 · answered by Dr D 7 · 1⤊ 1⤋