You are estimating the beta of the stock of Calico,Inc. using historical return information. The following information is available:

Historical return %:

Year Calico,Inc. Viprot, inc. LCK Index ( Market proxy)

2009 28 24 18

2008 18 -20 15

2007 15 18 22

2006 13 15 19

2005 -6 -8 -12

2004 24 15 36

2003 -20 -18 -28

2002 -8 -6 -13

Using the historical return data and simple linear regression ( may use calculator, showing calculator entries or Excel or any Statistical Package, showing work):

a. Estimate the betas for Calico,Inc. Viprot,Inc. & LCK Index.

b. Using the formula in the book: Adjusted beta = 0.67(historical beta) + 0.35(1.0), find the adjusted beta of Calico,Inc and Viprot,Inc

A CI is desired for the true average stray-load loss μ (watts) for a certain type of induction motor when the line current is held at 10 amps for a speed of 1500 rpm. Assume that stray-load loss is normally distributed with σ = 2.2. (Round your answers to two decimal places.)

(a) Compute a 95% CI for μ when n = 25 and x = 50.3. , watts

(b) Compute a 95% CI for μ when n = 100 and x = 50.3. , watts

(c) Compute a 99% CI for μ when n = 100 and x = 50.3. , watts

(d) Compute an 82% CI for μ when n = 100 and x = 50.3. , watts

(e) How large must n be if the width of the 99% interval for μ is to be 1.0? (Round your answer up to the nearest whole number.) n =

An Izod impact test was performed on 20 specimens of PVC pipe. The ASTM standard for this material requires that Izod impact strength must be greater than 1.0 ft-lb/in. The sample average and standard deviation obtained were x over Bar = 1.121 and s = 0.328, respectively. (a) Test the hypothesis that σ2 = 0.10 against an alternative specifying that σ2 ≠ 0.10, using α = 0.01 (if reject enter a value of 1, if not, enter a value of 2). (b) What is lower bound and upper bound of P-value for this test? Round your answers to 1 decimal place. Answers are exact. (c) Find a 99% two-sided CI for σ2: lower bound and upper bound. Round your answers to 3 decimal places. (d) Use the confidence bound in the previous part to test the hypothesis (if reject enter a value of 1, if not, enter a value of 2).

*MiniTab Is Required for this question** Suppose that a precise measuring device for new hair growth has been developed and is used in the experiment described in exercise 1922. The percentages of new hair growth for the 30 pairs of men involved in the experiment were recorded. Do these data allow the chemist to conclude that drug B is more effective?

Drug A   Drug B
3.5   7.1
2.4   6.6
4.2   4.2
1.1   1.0
2.9   2.7
2.8   4.1
5.6   8.3
4.8   8.8
0.8   0.8
3.6   3.4
2.0   1.8
5.6   6.9
4.3   6.8
7.1   7.9
3.8   6.2
3.6   3.5
4.2   7.3
2.8   2.7
6.1   9.5
3.7   6.2
4.0   6.7
3.5   6.8
3.1   3.0
6.0   9.0
5.3   8.4
2.6   4.1
4.8   4.8
2.2   1.8
4.2   5.6
0.8   2.2

-Find the linear correlation coefficient. (Enter a number. Round your answer to four decimal places.)

R=

-Find the least-squares regression for these data where speed is the independent variable, x, and pulse rate in beats per minute (bpm) is the dependent variable. (Enter a mathematical expression. Round your numerical answers to two decimal places.)

ŷ =

-Assuming the regression line is accurate for higher speeds, what is the expected pulse rate (in bpm) for someone traveling 5 mph? Round to the nearest whole number. (Enter a number.)

A CI is desired for the true average stray-load loss μ (watts) for a certain type of induction motor when the line current is held at 10 amps for a speed of 1500 rpm. Assume that stray-load loss is normally distributed with σ = 2.6. (Round your answers to two decimal places.)

(a) Compute a 95% CI for μ when n = 25 and x = 56.2.

(_____,______) watts

(b) Compute a 95% CI for μ when n = 100 and x = 56.2.
(_____,______) watts
(c) Compute a 99% CI for μ when n = 100 and x = 56.2

(_____,______) watts.

(d) Compute an 82% CI for μ when n = 100 and x = 56.2.

(_____,______) watts

(e) How large must n be if the width of the 99% interval for μ is to be 1.0? (Round your answer up to the nearest whole number
n = _____

Assume that stock market returns have the market index as a common factor, and that all stocks in the economy have a beta of 1.9 on the market index. Firm-specific returns all have a standard deviation of 40%. Suppose that an analyst studies 20 stocks and finds that one-half of them have an alpha of +2.8%, and the other half have an alpha of −2.8%. Suppose the analyst invests $1.0 million in an equally weighted portfolio of the positive alpha stocks, and shorts $1 million of an equally weighted portfolio of the negative alpha stocks. a. What is the expected profit (in dollars) and standard deviation of the analyst’s profit? (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) b. How does your answer change if the analyst examines 60 stocks instead of 20 stocks? 120 stocks?

An engineer has designed a valve that will regulate water pressure on an automobile engine. The valve was tested on 170 engines and the mean pressure was 6.7 pounds/square inch (psi). Assume the population standard deviation is 1.0. If the valve was designed to produce a mean pressure of 6.6 psi, is there sufficient evidence at the 0.05 level that the valve performs above the specifications?

Step 1 of 6: State the null and alternative hypotheses.

Step 2 of 6:

Find the value of the test statistic. Round your answer to two decimal places.

Step 3 of 6:

Specify if the test is one-tailed or two-tailed.

Step 4 of 6:

Find the P-value of the test statistic. Round your answer to four decimal places.

Step 5 of 6:

Identify the level of significance for the hypothesis test.

Step 6 of 6:

Make the decision to reject or fail to reject the null hypothesis

Suppose that Apex HealthServices has four difference projects.These projects are listed below, along with the amount of capital invested and estimated corporate and market betas: Project Amount Invested Corporate beta Market Betas walk-in-clinic 500,000 1.5 1.1 MRI facility 2,000,000 1.2 1.5 Clinical laboratory 1,500,000 0.9 0.8 X-ray laboratory 1,000,000 0.5 1.0 5,000,000 (a)why do the corporate and market betas differ for the same project? (b)what is the overall corporate beta of Apex HealthServices? Is the calculated beta consistent with corporate risk theroy? (c)what is the overall market beta of Apex Health services? (d) How does the riskiness of Apex's stock compare with the riskiness of an average stock? (e) would stock investors required rate of return on Apex that is greater than, less than,or the same as the return on an average-risk stock?