Question

In: Statistics and Probability

Need assistance answering the following question: QNT 601 Two sample t test with monthly data from...

Need assistance answering the following question: QNT 601 Two sample t test with monthly data from GFD (Global Financial Data) Conduct a two-sample t-test at a 1% level of significance to find out if the U.S. stock returns significantly outperform the US bond returns using the monthly data covering the sample period 1980-2017. Draw your conclusion by both the P value method and the Critical Value Method. Submit the Excel printout (not the sample data on returns) related to the question along with your solutions.

Data is too big to post and I am unable to upload the excel document. Please just explain steps in how to get answer in excel using the P value method and the Critical Value Method.

Solutions

Expert Solution

To perform a t-Test, execute the following steps.

1. First, perform an F-Test to determine if the variances of the two populations are equal.

2. On the Data tab, in the Analysis group, click Data Analysis.

3. Select t-Test: Two-Sample Assuming Unequal Variances and click OK.

Select t-Test: Two-Sample Assuming Unequal Variances

4. Click in the Variable 1 Range box and select the range of first variable

5. Click in the Variable 2 Range box and select the range of second variable

6. Click in the Hypothesized Mean Difference box and type the drsited(Eg:H0: μ1 - μ2 >0)

Enter the desired level of significance (.01 here)

7. Click in the Output Range box

8. Click OK.

Results will appear

Interpretation

p value method

If the p value (one tailed) is greater than 0.05,the null hypothesis is accepted and mean of stock returns outperforms mean of bound returns

t critical value method

If the t stat is smaller than t critical(one tail),then null hypothesis is accepted and mean of stock returns outperforms bound returns


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