Need the answers to Parts (a) thru (d). If you want to answer more I would great

Question

Need the answers to Parts (a) thru (d). If you want to answer more I would greatly appreciate it. Please show all work so I can study the material. Thanks!

2. (Test for variance) We can use derivatives trading to make money betting that the volatility of a market goes up or down. We sample the price of Bitcoin every day for the last ten days of October 2016 Date Price 31 Oct 2016 702.09 30 Oct 2016 708.94 29 Oct 2016 708.56 28 Oct 2016 689.81 27 Oct 2016 684.89 26 Oct 2016 667.12 25 Oct 2016 659.05 24 Oct 2016 654.36 23 Oct 2016 657.27 22 Oct 2016 646.39 Set your significance a 0.05 and the null hypothesis Ho o2 570. We test Ho against the alternative hypothesis Ha 570. (a) How many degrees of freedom will our x2 test statistics have? (b) On the x2 table, should we find the critical value XN-1.a, the critical value XN-1.1-a, or the pair of critical values xN-1,a/2, xN-1,1-a/2 Explain and justify your choice of critical value(s) (c) Find the critical value(s) (d) Compute the sample standard deviation S N-1 NI(x -X)2. (e) Compute the test statistic (f) Is x N-1,1-a M? Do we reject the null hypothesis or not? That is to say: are the data inconsistent with the idea that volatility of price or is large (compared to 570)? Explain. (g) What is the p-value of our data (h) Suppose we performed the same analysis as above, except we performed the analysis on the deviation between daily price and mean price: Y(i) Price (i) Price Would our conclusions above change at all?

Explanation / Answer

Using Minitab Output:

Test and CI for One Variance: Price

Method

Null hypothesis -squared = 570
Alternative hypothesis -squared < 570

The chi-square method is only for the normal distribution.
The Bonett method is for any continuous distribution.

Statistics

Variable N StDev Variance
Price 10 23.9 569

95% One-Sided Confidence Intervals

Upper
Bound
for Upper Bound
Variable Method StDev for Variance
Price Chi-Square 39.3 1541
Bonett 34.9 1220

Tests

Test
Variable Method Statistic DF P-Value
Price Chi-Square 8.99 9 0.562
Bonett — — 0.499

a) Degrees of freedom=n-1=10-1=9

b) We use 2=.05 ,n-1=9

c) Chi-Square critical value using table 2 .05 ,9=16.92

d)Standard dev =23.8

e) test statistic=8.99

Hope this all helpful to you. Thanks:) God Bless You!!!

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