Explanation:
The appropriate test is an -test, where the larger sample variance (Index A) is placed in the numerator.
(Book 2, Module 14.1, LO 14.a)
Ultimate access to all questions.
Question 48
An analyst is testing the hypothesis that the variance of monthly returns for Index A equals the variance of monthly returns for Index B based on samples of 50 monthly observations. The sample variance of Index A returns is 0.085, whereas the sample variance of Index B returns is 0.084. Assuming the samples are independent and the returns are normally distributed, which of the following represents the most appropriate test statistic?
A
B
C
D
No comments yet.