You are investigating whether the population variance of returns on the S&P 500/BARRA Growth Index changed subsequent to the October 1987 market crash. You gather the following data for 120 months of returns before October 1987 and for 120 months of returns after October 1987. You have specified a 0.05 level of significance.
A. Formulate null and alternative hypotheses consistent with the verbal description of the research goal.
B. Identify the test statistic for conducting a test of the hypotheses in Part A.
C. Determine whether or not to reject the null hypothesis at the 0.05 level of significance. (Use the F-tables in the back of this volume.)
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