Suppose that an investor wants to compare the risks associated with two different stocks. One way to measure the risk of a given stock is to measure the variation in the stock’s daily price changes. The investor obtains a random sample of 25 daily price changes for stock 1 and 25 daily price changes for stock 2. These data are provided in the file P09_20.xlsx. Explain why this investor can compare the risks associated with the two stocks by testing the null hypothesis that the variances of the stocks’ price changes are equal.A hypothesis test for equal population variances is
appropriate
because the two stock price changes can be assumed
independent from
each other.

Perform this test, using a 10% significance level, and interpret the results. Round your answer for p-value to three decimal places, if necessary.

With a p-value of
0.022
, we
reject
the null hypothesis of equal variance. There
is
enough evidence to support the claim that the two stock prices
do not have
the same risk.