F test / Chi Square Test

balajismz
Finance Junkie
Posts: 63
Joined: Mon Nov 05, 2012 9:13 am

F test / Chi Square Test

Postby balajismz » Sun Nov 11, 2012 6:21 pm

A Fixed Income Mutual Fund analyst collected the quarterly data for 5 year government securities returns for the 10 year period from 1999-2009. The variance for the data is 0.0210 and it is normally distributed. The analyst collected the data for another two years for which the variance is 0.0296. He then uses the hypothesis testing at 5% significance level to determine if the more recent variance is greater from the historical variance. He made following remarks:
I.The most appropriate test for this hypothesis would be F-test and it would be a one tail hypothesis testing.
II.The value of test statistics would be 9.8667
III. The critical value for the test is taken at 39 degrees of freedom.
IV.It can be concluded from the hypothesis testing that the recently measured variance is sufficiently greater than the historical variance.
Which of the above remarks made by the analyst is/are incorrect.

Can someone explain whether this is a F test or Chi Square test?? I am confused.

Thanks

Balaji

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balajismz
Finance Junkie
Posts: 63
Joined: Mon Nov 05, 2012 9:13 am

Re: F test / Chi Square Test

Postby balajismz » Mon Nov 12, 2012 2:16 pm

Admin,

Could you please address this query.

Thanks,

Balaji

content.pristine
Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

Re: F test / Chi Square Test

Postby content.pristine » Mon Nov 12, 2012 4:09 pm

To compare two standard deviations, we use F test.
8-)

balajismz
Finance Junkie
Posts: 63
Joined: Mon Nov 05, 2012 9:13 am

Re: F test / Chi Square Test

Postby balajismz » Mon Nov 12, 2012 5:41 pm

Right, answer given is Chi Sq Test

Source: Mock Test 11th Nov

Could you please check and confirm

Thanks,

Balaji


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