MBA 203 Case Assignment Group 2

Task

This is the second of three groups of case assignments in the course. Since These Assignments Are Graded And Will Be The Sole Basis For The Course Grade, You May Not Seek Assistance From Others In Completing The Assignments Beyond Asking The Instructor To Clarify Instructions
For The Assignments.

One week of the semester has been allocated for you to complete this group of case assignments.

Your work on this group of case assignments should be in one Excel file that contains all the supporting hypothesis tests and analytical work on the cases. Each case should have a separate worksheet with a labeled tab identifying the case number. Organize each worksheet for easy
readability and so supporting work can be located easily.

Unlike Case Group # 1, you should not prepare a separate file of discussions in a Microsoft Word or Adobe Acrobat file for this case group.

About using Excel for the case assignments: Whenever possible, compute all intermediate values and answers in Excel. In other words, avoid calculating values by hand with a calculator or getting them from some other source and then typing the value into a cell on a spreadsheet when the value could be determined from an Excel formula or the Data Analysis add-in. While it is helpful to learn how to do some basic statistical calculations on your calculator, one intent of these case assignments is to appreciate the use of computer-assisted computation in Excel.

90% of your grade on the cases will be earned by meaningful, logical work and accuracy. The remaining 10% will be assigned for satisfactory organization of the worksheets in your submitted workbook. If I have difficulty following your analytical work due to poor organization, or due to extraneous or contradictory content, you may have these points deducted.

All the cases will involve analysis of the data in the file Case # 2 Data.xlsx, which is provided from the assignment preparation page for Case # 2, available by link from the home page of the MBA 203 Canvas shell. In questions estimating or testing a parameter value, treat these data like
a random sample from distributions of possible values for each variable being measured or observed.

Some cases ask for a hypothesis test. Every hypothesis test in your worksheets should be in good form. Each presentation of a hypothesis test should identify, and where appropriate calculate:

(1) the hypotheses in correct syntax,

(2) the test statistic for the applicable sampling distribution,

(3) the decision rule for the test in terms of critical test statistic values,

(4) the calculated test statistic value,

(5) the p-value associated with the calculated test statistic value,

(6) a definitive statement of the conclusion of your hypothesis test

(7) finally a clear statement in conversational English of the implication that follows from your conclusion in the context of the data being analyzed. For all hypothesis tests, use a significance level of 0.05.

Calculate a 95% confidence interval on the true long-run proportion of years when nominal annual returns for the S&P 500 with dividends will be negative. Below the presentation of the interval you determine in your worksheet, provide a clear statement in conversational English of what a 95% confidence interval means in the context of this exercise that would be understandable to someone who may not have a deep understanding of statistics.

A financial guide that was created to help investors plan for retirement advises the reader to assume the average annual real return (i.e., the return after removing the effect of inflation) of large cap stocks based on the S&P 500, including dividends, will be 12%. A critical reviewer of the guide claims that this assumed average return is too high. Based on the historical data in your data set, test this claim.

A political analyst stated that, contrary to the common perception that Republicans are more probusiness, the stock market does better on average when the U.S. has Democratic President in the White House. Using the annual nominal returns on the S&P 500 with dividends in your data set, test whether mean U.S. stock market returns are significantly better with a Democrat as U.S. President.

Some financial advisors treat 90-day U.S. Treasury bills (T-bills) as safe, liquid, cash investments that will keep pace with inflation on average, even though those annual rates may differ within a given year. Using your data set, determine if there is evidence that, on average, the rate of inflation during a year differs from the annual return from investments kept in 90-day Treasury bills.