Consider the expected returns (in percent)from the two investment options.Beth claims that the variances of the returns for the two investments differ.Use the following data to arrive at the results. Test Beth's claim at the 5% significance level.Which of the following is the correct conclusion? A) p-value = 0.7127 α = 0.05;Beth's claim is correct. B) p-value = 0.7127 α = 0.05;Beth's claim is wrong. C) p-value = 0.7127

Question

Consider the expected returns (in percent)from the two investment options.Beth claims that the variances of the returns for the two investments differ.Use the following data to arrive at the results. Test Beth's claim at the 5% significance level.Which of the following is the correct conclusion? A) p-value = 0.7127 >α = 0.05;Beth's claim is correct. B) p-value = 0.7127 >α = 0.05;Beth's claim is wrong. C) p-value = 0.7127 <α = 0.05;Beth's claim is wrong. D) p-value = 0.7127 <α = 0.05;Beth's claim is correct.

Quizplus · Accepted Answer

We can use a two-sample t-test to test whether the variances of the returns for the two investments are different. The null hypothesis is that the variances are equal, and the alternative hypothesis is that the variances are different. Using a calculator or software, we obtain a p-value of 0.7127. Since this p-value is greater than the 0.05 significance level, we fail to reject the null hypothesis. Therefore, we do not have sufficient evidence to support Beth's claim that the variances of the returns for the two investments differ. The correct conclusion is that Beth's claim is wrong.

Consider the Expected Returns (In Percent)from the Two Investment Options