BSB Solutions

Hypothesis testing part 3 Question I Managed funds provide the individual investor with a convenient medium for diversification. A managed fund spreads its investment over numerous securities, so that individuals who purchase a share in a managed fund are investing in 3 highly diversified portfolio, something they could not achieve on their own with limited funds. Managed funds tailor their diversification strategies to different investor groups. There are capital-growth funds, current income funds, equity funds, bond funds and so on.The table below lists the level of turn over five years for a sample of investors for various categories of managed funds. Level of Return Managed Fund Type High Return Medium Return Low Return TOTAL Maximum capital gain 41 Long-term growth Growth and current income Balanced income Common stock 28 (a) Determine at the 0.

05 level Of significance if there is evidence Of a significant relationship between the level of return and the type of managed fund. HO: Level of return and managed fund type are independent.In order to determine that sample size necessary, she needs an estimate of the standard deviation. On the basis of her past experience and judgment, she estimates that the standard deviation is equal to $12. Suppose that a small-scale study of 15 residential customers indicates a sample standard deviation of SO,25. (a) At the 0.

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10 level of significance, is there evidence that the population standard aviation is different from $12? HO: = 12. HI: 12, Decision rule: UDF = If <6. 5710r > 23.

685, reject HO.Test statistic: = 8. 319 Decision: Since the test statistic of = 8. 319 is between the critical boundaries of 6. 571 and 23. 685, do not reject HO.

There is insufficient evidence to conclude that the standard deviation of the monthly cost of calls within the local calling region differs from $12 (b) What assumption do PU need to make in order to perform this test? You must assume that the data in the population are normally distributed to be able to use the chi-square test of a population variance or standard deviation.HI: Level of return and managed fund type are dependent. Decision rule: It 02 > 15. 507, reject HO. Compare observed and expected frequencies EXPECTED FREQUENCIES Managed Pound Type 33. 15 38.

72 46. 13 26. 69 31.

17 37. 14 35. B 41. 69 49,65 32, so 38. 06 45,35 14,89 17. 39 20. 72 e. G.

Max capital gain/High:Test statistic: Decision: Since archaic=22. 65 is more than the critical bound of 15_507, reject HO. There is sufficient evidence to conclude that there is a relationship between the managed fund type and the level Of return. B) What does this finding say about managed fund investment? Managed funds may spread the risk but this does not mean that there is no risk i. E.

As the level Of return does depend upon the particular managed fund type Question 3 The marketing manager of a branch office of a telephone company wants to study characteristics of residential custom.