Question

A sample of 60 mutual funds was taken and the mean return in the sample was 13% with a standard deviation of 6.9%. The return on a particular index of stocks (against which the mutual funds are compared) was 11.5%. When testing the hypothesis (at the 5% level of significance) that the average return on actively-managed mutual funds is higher than the return on an index of stocks, what is the p-value? (please round your answer to 4 decimal places)

Answer 1

n = 60 = 13%    = 6.9%

(I am using the absolute values)

We are to test whether the population mean return () is greater than the stock index ( = 11.5%).

Since we are testing to check if the mean is higher than the null it is one-tailed test.

We are given the sample statistic with unknown population SD and we are to test for a mean so we will use t-dist.

At =0.05

test statistic =

=

= 0.8908

P-value is the probability of the null hypothesis being true.

P-value =

=

Using the t-dist probability tables with x = 0.89 and df = 59