Question

9. (9 pts) An investor with a stock portfolio worth several hundred thousand dollars sued his broker and

brokerage firm because lack of diversification in his portfolio led to poor performance. The following data

lists the rates of return, in percent, for the 39 months that the account was managed by the broker. The

arbitration panel compared these returns with the average S&P 500 for the same period. Does the data

show that the mean return is different from 0.95%, the average return for the S&P 500. Use

α= 0.01.

(-8.36, 1.63, -2.27, -2.93, -2.70, -2.93, -9.14, -2.64, 6.82, -2.35, -3.58, 6.13, 7.00, -15.25, -8.66, -1.03, -

9.16, -1.25, -1.22, -10.27, -5.11, -0.80, -1.44, 1.28, -0.65, 4.34, 12.22, -7.21, -0.09, 7.34, 5.04, -7.24, -2.14, -1.01, -

1.41, 12.03, -2.56, 4.33, 2.35)

Answer 1