Question

In: Statistics and Probability

Does anyone have experience with during a lab on conducting a 2-sample t-test at a 1%...

Does anyone have experience with during a lab on conducting a 2-sample t-test at a 1% level of significance to find out if the U.S. stock returns significantly outperform the U.S. bond returns using the monthly data covering the sample period of 1980-2017? Draw conclusions by both the P Value and Critical Value Method.

Arnavbha - I have an excel spreadsheet with data, but how do I get it to you?

Solutions

Expert Solution

You have to conduct right-tailed t-test for 2-sample

this can be done in Excel easily

go to data -> data analysis -> t-Test: Two-Sample Assuming Equal Variances

{If you are not seeing data analysis , you have to add plug-in}

select data both variables

choose alpha

the output will be something like this

t-Test: Two-Sample Assuming Equal Variances
stock bond
Mean 36.135625 36.27625
Variance 1902.812989 1923.616141
Observations 8 8
Pooled Variance 1913.214565
Hypothesized Mean Difference 0
df 14
t Stat -0.006429996
P(T<=t) one-tail 0.497480184
t Critical one-tail 1.761310136
P(T<=t) two-tail 0.994960368
t Critical two-tail 2.144786688

Note that this is just dummy result

Now look at p-value for one-tail as right-tailed is 1-tailed

if p-value < alpha, we reject the null hypothesis

using critical value method

if TS > critical value , then we reject the null hypothesis

take critical value of one tail

Please rate

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