Tamara Hill,fund Manager of the Hill Value Fund,manages a Portfolio $\alpha$

question 61

Multiple Choice

Tamara Hill,fund manager of the Hill Value Fund,manages a portfolio of 250 common stocks. Tamara is searching for a 'low risk' issue to add to the portfolio,i.e.,one with a price variance less than that of the S&P 500 index. Moreover,she assumes an issue is not 'low risk' until demonstrated otherwise. Her staff reported that during the last nine quarters the price variance for the S&P 500 index (population 1) was 25,and for the last seven quarters the price variance for XYC common (population 2) was 8. Assume that stock prices are normally distributed in the population.Using $\alpha$ = 0.05,the appropriate decision is _______.

• A) reject the null hypothesis \(\sigma\)₁² = \(\sigma\)₂²
• B) reject the null hypothesis \(\sigma\)₁² \(\neq\) \(\sigma\)₂²
• C) do not reject the null hypothesis\(\sigma\)₁² = \(\sigma\)₂²
• D) do not reject the null hypothesis\(\sigma\)₁² \(\neq\) \(\sigma\)₂²
• E) do nothing

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Definitions:

Normal Balance

The side of an account that is increased, which for assets, expenses, and dividends is the debit side, and for liabilities, equity, and revenue is the credit side.

Financial Statement

A documented account detailing the commercial operations and fiscal outcomes of an enterprise.

Normal Balance

The usual balance of an account based on its classification in the accounting system, typically debit for assets and expenses, and credit for liabilities, equity, and revenue.

Financial Statement

Formal records of the financial activities and position of a business, person, or other entity.