Over the past 30 years, the sample standard deviations of the rates of return for stock X and Stock Y were 0.20 and 0.12, respectively. The sample covariance between the returns of X and Y is 0.0096. To determine whether the correlation coefficient is significantly different from zero, the appropriate hypotheses are ________. A) H₀: μ = 0, H_A: μ ≠ 0 B) H₀: ρ_xy = 0, H_A: ρ_xy ≠ 0 C) H₀: μ = 1, H_A: μ ≠ 1 D) H₀: ρ_xy = 1, H_A: ρ_xy ≠ 1

Question

Quizplus · Accepted Answer

To test whether the correlation coefficient is significantly different from zero, we need to set up the following hypotheses: Null hypothesis: ρxy = 0 Alternative hypothesis: ρxy ≠ 0 Therefore, the appropriate choice is B, where H₀: ρ_xy = 0 and H_A: ρ_xy ≠ 0.

Over the Past 30 Years, the Sample Standard Deviations of the Rates