The Historical Returns for the Past Three Years for Stock

question 20

Multiple Choice

The historical returns for the past three years for Stock B and the stock market portfolio were Stock B: 24 percent, 0 percent, 24 percent; market portfolio: 10 percent, 12 percent, 20 percent. Calculate the observed variance of the market portfolio returns. (Ignore the correction for the loss of a degree of freedom set out in the text.)

• A)192.0
• B)128.0
• C)28.0
• D)18.7

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Definitions:

Effect Size

A quantifiable measure of the magnitude of a phenomenon or the strength of a relationship in a statistical analysis.

Statistical Tests

Procedures used in inferential statistics to determine the probability of a hypothesis being true based on sample data.

Degrees of Freedom

The amount of distinct quantities or measures which are assignable to a statistical distribution without contravening existing constraints.

Test Statistic

A numerical value derived from an experiment's data, utilized in hypothesis testing to decide if the null hypothesis should be dismissed.