Probability 1. According to Investment Digest (“Diversification and the Risk/Reward Relationship”, Winter 1994, 1-3), the mean of the annual return for common stocks from 1926 to 1992 was 15.4%, and the standard deviation of the annual return was 24.5%. During the same 67-year time span, the mean of the annual return for long-term government bonds […]

# hypothesis testing

# Hypothesis Testing example problem

A bus company advertised a mean time of 150 minutes for a trip between two cities. A consumer group had reason to believe that the mean time was more than 150 minutes. A sample of 40 trips showed a mean x̄= 153 minutes and a standard deviation s=7.5 minutes. At the .05 level of significance, […]