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clearlycanadian

An analyst claims that the average stock listed on the London Stock Exchange (LSE) experiences an 8% return. Returns of LSE-listed stocks are normally distributed, and the known population standard deviation of exchange-listed stock returns is 5%. An investor in derivatives against an LSE composite portfolio hears this claim, and worries because 8% represents his breakeven point (i.e., returns greater than 8% will ruin his strategy). The investor decides to test the analyst’s claim, but realizes that it is not sufficient enough to just test whether the average return equals 8% - he must verify that the average return is at most 8%. To this end, the investor takes a sample of 50 companies listed on the exchange and calculates a sample mean of 11%. What is the calculated value of the test statistic and is the mean return of the exchange-listed stocks less than or equal to 8% at the 5% level of significance?

a. 4.2426; the population mean is less than or equal to 8%.

b. 4.2426; the population mean is greater than 8%.

c. 0.60; the population mean is less than or equal to 8%.

dotamasta

C is wrong