A manager is claiming that her stock picks, on average ...

By Investopedia Staff AAA
Q:
A manager is claiming that her stock picks, on average, outperform the S&P 500 by 3.3% per year. A competitor decides to test the validity of this statement by examining the past performance of 25 of the 200 stocks that this manager has purchased over the last year. The mean of the sample was only 2.8% while its standard deviation was 4.5%. With a level of significance of 5%, what conclusion best describes this manager's claims?
a) Since the t-calc of -1.27 is within the acceptance range of -2.064 and 2.064, the manager's claim cannot be rejected.
b) Since the t-calc of -.56 is within the acceptance range of -2.086 and 2.086, the manager's claim cannot be rejected.
c) Since the t-calc of -1.27 is within the acceptance range of -2.086 and 2.086, the manager's claim cannot be rejected.
d) Since the t-calc of -.56 is within the acceptance range of -2.064 and 2.064, the manager's claim cannot be rejected.
A:
The correct answer is: d)

2005 CFA Level 1 LOS: 3.1.B.m

RELATED FAQS

  1. Sometimes investment banking firms allocate shares of hot issues to the personal ...

    The correct answer is a) Spinning is the act of selling hot issues to the personal accounts of corporate officers which in ...
  2. Donald has been putting aside money for his retirement into a Roth IRA for six years.  Although ...

    The correct answer is A) In a Roth IRA, there is no required distribution date as there is in a traditional IRA.
  3. A 7-year, 6% coupon callable bond is currently trading at 96.25.  The ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  4. According to SEC Release IA-1092, which of the following would NOT qualify as an ...

    The correct answer is C). SEC Release IA-1092 considers financial planners, pension consultants and sports and entertainment ...
RELATED TERMS
  1. No results found.

You May Also Like

Related Articles
  1. No results found.
Trading Center