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    Hypothesis Testing of Variances - F test

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    Problem:

    5-Dec
    Alaska American America West British Continental
    7.74% 7.67% -0.89% -2.52% 4.12%

    Delta JetBlue Northwest Southwest US Airways
    4.45% 3.14% 4.84% 3.53% No Change

    Estimate the variance of the percent change in airline stock

    6-Dec
    Alaska American America West British Continental
    5.71% 5.54% 0.90% 1.08% 1.98%

    Delta JetBlue Northwest Southwest US Airways
    3.80% 1.25% 2.50% 0.74% 3.70%

    Estimate the variance of the percent change in airline stock

    Test all the null hypothesis that the variance of the change on December 5 is equal to the
    variance of the change in December 6 against the alternative hypothesis that the December 5 variance is
    greater, using an F test. What economic conclusions might you draw from the test result.

    © BrainMass Inc. brainmass.com October 9, 2019, 9:58 pm ad1c9bdddf
    https://brainmass.com/statistics/hypothesis-testing/hypothesis-testing-of-variances-f-test-203825

    Attachments

    Solution Preview

    Please see the attached file for tables and formulas.

    Solution:

    Null hypothesis: Variances of change on both days are same
    ...

    Solution Summary

    Solution describes the steps for calculating variances of changes in different airlines stocks and then hypothesis testing is carried for differences in variances.

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