Question

In: Statistics and Probability

Samuel has two different methods to make money off of the stock market, but he doesn't...

Samuel has two different methods to make money off of the stock market, but he doesn't know which method is better, so he tried both methods for one year. On the one hand plan 1 (SP1) made on average X¯1=19.24 dollars per week, where plan 2 (SP2) made an average X¯2=15.30 dollars per week. The downside of plan 1, however, seems to be that the standard deviation, s1=21.39 is greater then plan 2's and once he even had a minimum of -17.37 dollars one week. Plan 2 appears to be more conservative, s2=17.08 and the lowest amount made in a week was -13.85. Can you help him find out whether these two plans are statistically similar? In all cases use SP1 as sample 1. The specifics can be found in the file below.

SP1 SP2
14.74 11.98
31.02 5.4
35.34 27.12
-14.82 -9.59
43.08 -2.82
23.96 39.03
49.06 -11.4
42.85 -6.92
11.67 16.93
49.75 35.32
-12.33 36.08
26.18 32.8
26.19 4.15
-16.96 15.33
45.54 24.82
43.95 -8.02
-8.75 11.06
-7.69 36.47
50.21 39.89
31.17 5.04
11.4 36.58
1.13 14.05
27.49 -0.71
34.6 33.49
9.33 33.25
3.59 22.28
39.77 -7.17
23.01 36.29
-12.72 15.71
34.4 36.99
34.35 18.65
-17.37 15.32
10.95 20.21
47.2 18.64
8.72 13.5
5.98 -5.2
20.95 24.2
51.72 22.38
24.89 35.73
44.53 -4.29
45.22 38.72
15.97 -6.65
42.85 -6.2
3.37 -1.98
3.23 -13.85
38 -9.03
3.39 26.51
-1.68 32.77
-13.59 -6.38
0.71 4.84
-9.15 33.34
4.11 20.81

Check to see if the distribution of the stock plans appear to be normal. Hint: use a probability plot to decide and an alpha = 0.05
A. neither plan 1 appear to be normal nor plan 2 appear to be normal
B. Both plan 1 and plan 2 appear to be normal
C. plan 2 appears to be normal but plan 1 does not appear to be normal
D. plan 1 appears to be normal but plan 2 does not appear to be normal

(b) Report the p-value of the test you ran in (a) concerning the normality of plan 2 use exactly two decimals in your answer.
P-value =



(c) Does there appear to be a statistical difference between Stock Plan 1 and Stock Plan 2? (Remember to use CLT if applicable)
A. I don't have enough information to answer this question
B. I have too much information to answer this question
C. Yes
D. No

(d) Report the test statistic value you ran in (c). Use at least two decimals in your answer.



(e) Report the p-value of the test you ran in (c). Use at least three decimals in your answer.
P-value =

Solutions

Expert Solution

Check to see if the distribution of the stock plans appear to be normal. Hint: use a probability plot to decide and an alpha = 0.05
A. neither plan 1 appear to be normal nor plan 2 appear to be normal

(b) Report the p-value of the test you ran in (a) concerning the normality of plan 2 use exactly two decimals in your answer.
P-value = <0.00


(c) Does there appear to be a statistical difference between Stock Plan 1 and Stock Plan 2? (Remember to use CLT if applicable)
D. No

(d) Report the test statistic value you ran in (c). Use at least two decimals in your answer.


1.04
(e) Report the p-value of the test you ran in (c). Use at least three decimals in your answer.
P-value = 0.3013

SP1 SP2
19.2406 15.2975 mean
21.3864 17.0758 std. dev.
52 52 n
102 df
3.94308 difference (SP1 - SP2)
374.48124 pooled variance
19.35152 pooled std. dev.
3.79514 standard error of difference
0 hypothesized difference
1.04 t
.3013 p-value (two-tailed)

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