For this question, you have been given data for Home Depot, Inc. (ticker symbol:

Question

For this question, you have been given data for Home Depot, Inc. (ticker symbol: HD) company betas from the Research Insight database (installed on the Alden ubrary computers). The data given to you is monthly data for the beta from June 2009 to May 2014. Test the hypothesis that the company you selected does not act as a neutral stock for the time period selected. Test your hypothesis using a 5% significance level. 1. Fill in the basic summary statistics for your company beto data: Mean Stdeviation H0: H1: 2, state the hypothesis 3. Test statistic 4. Critical value for the test statistic Rejection Region (RR) diagram Note: Include the test statistic and the critical values on this diagram 5.

Explanation / Answer

By using MINITAB ,

1]

Descriptive Statistics: x

  
Variable Obs Mean StDev Minimum Median Maximum
x 60 0.7925 0.0875 0.6410 0.7875 1.0460

2] State the hypotheses,

H0 : mu = 0 vs H1: mu is not equal to 0.

3] Test Statistics ,

Here we can use Ztest because sample size > 30

Z = (xbar - mu) / (sigma/sqrt(n))

Z = 0.7925 / (0.0875 / sqrt(60))

Z = 0.7925 / 0.0113

Z = 70.1563

4 ]  alpha = 0.05

Z(0.05/2) = 1.96

5]

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