Que no.32. not able to solve this
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This has a direct formula –
Number of years(T)> (t statistic/IR)^2
At 95% confidence, t stat = 1.96
We have IR = 0.1
So, T>(1.96/0.1) = T> 384 years.
Note : In case you wanted to ask where did this formula come from, here is the hint :
H0 : alpha <= 0
H1 : alpha > 0
For H0 to be rejected at 95% Confidence –
t stat of alpha should be greater than 1.96
((alpha – 0)/(SD of Alpha/sqrt(T)))>1.96
You get T>(1.96/IR)^2