Three Different Models of Automobiles (A, B, and C) Were

question 5

Essay

Three different models of automobiles (A, B, and C) were compared for gasoline consumption. For each model of car, fifteen cars were randomly selected and subjected to standard driving procedures. The average miles/gallon obtained for each model of car and sample standard deviations are shown below. $$\begin{array}{l}&\text { Car } A & \text { Car B } & \text { Car C } \\\text { Average miles per gallon }&42 & 49 & 44 \\\text { Sample standard deviation }&4 & 5 & 3\end{array}$$ Use the above data and test to see if the mean gasoline consumption for all three models of cars is the same. Let α = .05.
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Definitions:

Market Risk Premium

The extra return expected by investors for holding a risky market portfolio instead of risk-free securities.

Risk-free Interest Rate

The theoretical return on investment with zero risk of financial loss, typically associated with government bonds.

Total Risk

The sum of all risks affecting an investment, including both systematic (market) and unsystematic (individual) risks.

Systematic Risk

The danger associated with the overall market or a specific sector of the market that cannot be mitigated by spreading investments.