The following frequency distribution shows the monthly stock returns for Home Depot for the years 2003 through 2007. Over the time period,the following summary statistics are provided: Mean = 0.31%,Standard deviation = 6.49%,Skewness = 0.15,and Kurtosis = 0.38.At the 5% confidence level,which of the following is the correct conclusion for this goodness-of-fit test for normality?
A) Reject the null hypothesis;conclude that monthly stock returnsare normally distributed with mean 0.31% and standard deviation 6.49%.
B) Reject the null hypothesis;conclude that monthly stock returnsare not normally distributed with mean 0.31% and standard deviation 6.49%.
C) Do not reject the null hypothesis;conclude that monthly stock returnsare normally distributedwith mean 0.31% and standard deviation 6.49%
D) Do not reject the null hypothesis;conclude that monthly stock returnsare not normally distributed with mean 0.31% and standard deviation 6.49%.

Question

The following frequency distribution shows the monthly stock returns for Home Depot for the years 2003 through 2007.  Over the time period,the following summary statistics are provided: Mean = 0.31%,Standard deviation = 6.49%,Skewness = 0.15,and Kurtosis = 0.38.At the 5% confidence level,which of the following is the correct conclusion for this goodness-of-fit test for normality?
A) Reject the null hypothesis;conclude that monthly stock returnsare normally distributed with mean 0.31% and standard deviation 6.49%. 
B) Reject the null hypothesis;conclude that monthly stock returnsare not normally distributed with mean 0.31% and standard deviation 6.49%. 
C) Do not reject the null hypothesis;conclude that monthly stock returnsare normally distributedwith mean 0.31% and standard deviation 6.49% 
D) Do not reject the null hypothesis;conclude that monthly stock returnsare not normally distributed with mean 0.31% and standard deviation 6.49%.

Quizplus · Accepted Answer

We use the summary statistics given to perform a goodness-of-fit test for normality. Since the null hypothesis is that the data is normally distributed, and we fail to reject the null hypothesis, we can conclude that the monthly stock returns are normally distributed with mean 0.31% and standard deviation 6.49%. Therefore, the correct choice is C.

The Following Frequency Distribution Shows the Monthly Stock Returns for Home