Question: merrill lynch a wealth management and financial services company is...
Merrill Lynch, a wealth management and financial services company, is considering recommending a new stock to its clients. Prior to recommending it, they want to be able to say that the stock has outperformed the market return of 7% in the last ten years. To be as detailed as possible, they use monthly return data for the past 3 years. The average return for the stock is 7.3% and the known population standard deviation for stocks is 3%. Note, use whole numbers for percent (example for 7.3% plug in 7.3 not .073)
Find and enter the correct critical value needed to test your claim at the 5% significance level. Round your final answer to 4 decimals. Hint: Things you will need to know: alpha, df, is this one or two-tailed test, and which table to use!
Calculate the correct p-value for the test. Hint, you will need to use the appropriate table to find this and will require you to know alpha, and if it is a one or two-tailed test!