The U. S. stock returns significantly outperform the US bond returns using the monthly data covering the sample period 1980-2017. Draw your conclusion by both the P value method and the Critical Value Method.

To perform a t-Test, execute the following steps.

1. First, perform an F-Test to determine if the variances of the two populations are equal.

2. On the Data tab, in the Analysis group, click Data Analysis.

3. Select t-Test: Two-Sample Assuming Unequal Variances and click OK.

Select t-Test: Two-Sample Assuming Unequal Variances

4. Click in the Variable 1 Range box and select the range of first variable

5. Click in the Variable 2 Range box and select the range of second variable

6. Click in the Hypothesized Mean Difference box and type the drsited (Eg:H0: μ1 - μ2 >0)

Enter the desired level of significance (.01 here)

7. Click in the Output Range box

8. Click OK.

Results will appear

Interpretation

p value method

If the p value (one tailed) is greater than 0.05, the null hypothesis is accepted and mean of stock returns outperforms mean of bound returns

t critical value method

If the t stat is smaller than t critical (one tail), then null hypothesis is accepted and mean of stock returns outperforms bound returns