Hypothesis of randomness against the alternative

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A research analyst follows the biotechnology industry and examines the daily stock price of Amgen, Inc. over the past year. The table below shows a portion of the daily stock price of Amgen for the 252 trading days in 2010; the full data set can be found on the text website, labeled Amgen. The research analyst wants to test the random-walk hypothesis that suggests that stock prices move randomly overtime with no discernible pattern.

200_overtime with no discernible pattern.png

a. at the 5% significance level.Use the method of runs above and below the median to test the null hypothesis of randomness against the alternative that there is a trend

b. Can the research analyst conclude that the movement of Amgen's stock price is consistent with the random-walk hypothesis?

Reference no: EM131797978

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