Question

Please put step by step in Minitab

For the 15-year period between 1995 and 2010, ABC’s monthly return had a standard deviation of 5%. Matthew, a certified financial analyst, wishes to establish whether the standard deviation witnessed during that period still adequately describes the long-term standard deviation of the company’s return. He collects data on the monthly returns recorded between 1^st Jan. 2015 and 31^st Dec. 2016 and computes a monthly standard deviation of 4%.

Carry out a 5% test to determine if the standard deviation computed in the latter period is different from the 15-year value.

Please put step by step in Minitab

Answer 1

Go to Stat > Basic Statistic > 1 Variance.

Select the drop-down option "sample standard deviation".

Input the given data.

Click OK.

The output is:

The p-value is 0.191.

Since the p-value (0.191) is greater than the significance level (0.05), we fail to reject the null hypothesis.

Therefore, we cannot conclude that the standard deviation computed in the latter period is different from the 15-year value.

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