Question

Consider a simple random sample of monthly return of Nike Corporation. Use a 0.01 significance level to test the claim that this sample is from a population with a mean return equal to 4?

Answer 1

To test the claim that the sample of monthly returns of Nike Corporation is from a population with a mean return equal to 4, perform a hypothesis test using the t-distribution.

Step-by-step explanation:

To test the claim that the sample of monthly returns of Nike Corporation is from a population with a mean return equal to 4, we can perform a hypothesis test.

1. Null hypothesis: The population mean return is equal to 4 (μ = 4).
2. Alternative hypothesis: The population mean return is not equal to 4 (μ ≠ 4).
3. The random variable in this case is the monthly returns of Nike Corporation.
4. The distribution to use for the test is the t-distribution because the population standard deviation is unknown.
5. Calculate the test statistic using the sample data and the formula for the t-test.
6. Draw a graph of the t-distribution and shade the area corresponding to the p-value.