A negotiable certificate of deposit is a marketable receipt for funds deposited in a bank for a specified period of time at a specified rate of interest (Lee, Finnerty, and Norton, 1997).The table below lists the end-of-quarte
interest rate for three-month certificates of deposit from January 1986 through December 1999 with the concurrent end-of-quarter values of Standard & Poor's 500 Stock Composite Average (an indicator of stock market activity)
a. Locate Spearman's rank correlation coefficient on the STATISTIX printout above. Interpret the result.
b. Test the null hypothesis that the interest rate on certificates of deposit and the S&P 500 are not correlated against the alternative hypothesis that these variables are correlated. Use a = .10.
c. Repeat parts a and b using data from 1996 through the present, which can be obtained at your library in Standard & Poor's Current Statistics. Compare your results for the newer data with your results for the earlier period