The “January Effect” is an empirical regularity that tech stocks perform particu
ID: 3177884 • Letter: T
Question
The “January Effect” is an empirical regularity that tech stocks perform particularly well in January compared to other months of the year. Suppose you performed a statistical test with the null hypothesis that stocks’ average returns in January equaled their average returns in other months, and that you rejected this null hypothesis with a p-value of 4%. Does this threshold provide strong evidence for the January effect? Why or Why not?
The statistical test supports/does not support the January effect because…
Explanation / Answer
Since p-value is less than 0.05 so we reject the null hypothesis. But since p value is not very less than 0.05 so evidence is not very strong.
The statistical test supports the January effect because we reject the null hypothesis.
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