Posted: September 13th, 2017

Central Limit Theorem and Hypothesis Testing

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Homework 2: Central Limit Theorem and Hypothesis Testing

Turn in the homework in class. Show all of your work for questions 1C and 2B.

1: Consol Energy (Stock Symbol: CNX) and EQT Corporation (Stock Symbol: EQT) are both energy companies with operations in the Appalachian area. Suppose someone tells you, “Invest in either company. They will both give you the same return.” You would like to test how correct this statement is. 

A: Download the MONTHLY stock prices from Yahoo! Finance for the past 5 years. This gives you 60 observations. Calculate the MONTHLY returns and plot the EQT returns against the CNX returns.

B: Write down the null hypothesis you wish to test in terms of an expected value, . What is ? What is the alternative hypothesis?

C: Calculate the test statistic.

D: What is your conclusion?

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