Question

41. A portfolio manager is interested in reducing the risk of a particular portfolio by including assets that have little, if any, correlation. He wonders whether the stock prices for the firms Apple and Google are correlated. As a very preliminary step, he collects the monthly closing stock price for each firm from January 2012 to April 2012.

                                     Month                    Apple                           Google

1. $ 428.58                   $        614.89           
2. $ 497.57                   $        606.40           
3. $ 577.51                   $        627.27           
4. $ 606.00                   $        619.43           

= 527 = 617

sx = 80.30 sy = 8.72 sxy = 410.11

1. Compute the sample correlation coefficient.
2. Specify the competing hypotheses to determine whether the stock prices are correlated.
3. Calculate the value of the test statistic and approximate the corresponding p-value.
4. At the 5% significance level, what is the conclusion to the test? Explain.

i posted this question yesterday without getting an answer so this is a repost, please refund the old question and thank you in advance for helping me solve this

Answer 1

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