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  3. Intro to Computational Finance with R

Exercise

Hypothesis test for the mean

Still consider the constant expected return model (CER) that was introduced in exercise 2.

You would like to test for each \(\mu_i\) (\(i =\) VBLTX, FMAGX and SBUX):

$$H_0: \mu_i = 0 \text{ vs. } H_1: \mu_i \neq 0,$$

using a 5% significance level. In other words, you would like to investigate whether the mean return is significantly different from zero according to the data. Perform the test using the t-statistic as well as the 95% confidence. You can use the R function t.test() for this problem.

Instructions

100 XP

Use the t.test to perform the t-test for \(\mu_{VBLTX}\) and print the result to the console. What do you conclude?