A Financial Analyst Maintains That the Risk, Measured by the Variance

question 53

Multiple Choice

A financial analyst maintains that the risk, measured by the variance, of investing in emerging markets is more than 280(%) ². Data on 20 stocks from emerging markets revealed the following sample results: = 12.1% and s² = 361(%) ². Assume that the returns are normally distributed. Which of the following is the correct conclusion of the financial analyst's claim?

• A) Do not reject H₀. The financial analyst's claim is supported by the sample data at 1% significance level.
• B) Reject H₀. The financial analyst's claim is not supported by the sample data at 1% significance level.
• C) Do not reject H₀. The financial analyst's claim is not supported by the sample data at 1% significance level.
• D) Reject H₀. The financial analyst's claim is supported by the sample data at 1% significance level.

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