Question 1
Below are the quarterly returns on investment (in £000s) of two different investment projects which had the same initial outlay. There is a sample of 16 quarters of returns and your manager has asked you to investigate the relative performance of each project. In particular, your manager suspects that ‘Investment B’ outperforms ‘Investment A’ and she would like you to test this hypothesis. Perform an appropriate statistical test that incorporates your manager’s hypothesis.
Hint: in this question you will need to calculate the mean and standard deviation of each investment, assume that both returns come from independent samples, are both normally distributed and that the true (but unknown) variances are not the same.
