The risk of an investment is measured in terms of the variance in the return that could be observed. Random samples of 10 yearly returns were obtained from two different portfolios. The data are given next (in thousands of dollars).
a. Does portfolio 2 appear to have a higher risk than portfolio 1?
b. Give a p-value for your test and place a confidence interval on the ratio of the standard deviations of the two portfolios.
c. Provide a justification that the required conditions have been met for the inference procedures used in parts (a) and (b).
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