Notion of complexity
Using the notion of complexity as well as a box model, discuss why we have a regression effect.
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The distribution of annual returns on common stocks is roughly symmetric. What sample mean annual return (sample mean for the next 40 years before Andrew retires) would be higher than 80% of all samples mean annual returns?
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The alternative hypothesis is that the mean difference between the performance of the candidates is not zero. Conduct the appropriate analysis. Should H0 be rejected? What should the researcher conclude?
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