Question

Suppose a stock qualifies as having moderate risk if the standard deviation of its monthly rate of return is less

Answer 1

The conclusion of the Hypothesis Conclusion is; that there is sufficient evidence to support the claim that the fund has moderate risk.

How to test hypothesis claim?

We are given;

Sample size; n = 36

Population standard deviation; σ₀ = 10

Sample standard deviation; s = 4.95

Significance level; α = 0.05

Claim: Standard deviation less than 10

The claim is either the null hypothesis or the alternative hypothesis. The null hypothesis needs to contain an equality and the value mentioned in the claim. If the claim is the null hypothesis, then the alternative hypothesis states the opposite of each other. Thus;

Null Hypothesis; H₀: σ = 10

Alternative Hypothesis; H₁: σ < 10

Compute the value of the test statistic:

χ2 = [(n - 1)/(σ²)] * s²

χ2 = [(36 - 1)/(10²)] * 4.95²

χ2 = 8.576

The critical value of the left-tailed test is given in the row with df = n - 1 = 36 - 1 = 35 and in the column with 1 − α = 0.95 of the chi-square distribution table online, we have;

χ2_{1 - α} = 21.77

The rejection region then contains all values smaller than 21.77

If the test statistic is in the rejection region, then reject the null hypothesis:

8.576 < 13.848

Thus, we will reject H₀ and conclude that there is sufficient evidence to support the claim that the fund has moderate risk.

Read more about Hypothesis Conclusion at; brainly.com/question/15980493

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