To Test If the Mean Returns on a Major Index

question 8

Multiple Choice

To test if the mean returns on a major index have changed from the historic monthly average of 1.2%,a sample of 36 recent monthly returns is used to calculate the value of the relevant t_df test statistic.At the 5% level of significance,we reject the null hypothesis if this value is ____________.

• A) greater than 1.69
• B) greater than 1.645
• C) greater than 1.96 or less than −1.96
• D) greater than 2.03 or less than −2.03

---

Definitions:

Distribution

A mathematical description of observed or theoretical frequencies of occurrence of different possible outcomes in a dataset.

Sampling Distribution

The probability distribution of a given random-sample-based statistic, used to make inferences about a population.

Mean

The arithmetic average of a set of numbers, calculated by adding all the values together and dividing by the number of values.

Number of Successes

This term refers to the count of times an outcome of interest occurs in a statistical experiment.