Question

Suppose a mutual fund qualifies as having moderate risk if the standard deviation of its monthly rate of return is less than 6​%. A​ mutual-fund rating agency randomly selects 28 months and determines the rate of return for a certain fund. The standard deviation of the rate of return is computed to be 4.37​%. Is there sufficient evidence to conclude that the fund has moderate risk at the alpha equals 0.05 level of​ significance? A normal probability plot indicates that the monthly rates of return are normally distributed.

Answer 1

given data are:-

sample size (n) = 28

sample sd (s) = 4.37% = 0.0437

hypothesis:-

our claim is the alternative hypothesis.

the test statistic be:-

degrees of freedom = (n-1) = (28-1) = 27

p value be:-

[ in any blank cell of excel type =CHISQ.DIST(14.3227,27,TRUE) preee enter]

decision:-

p value = 0.0221 <0.05 (alpha)

so, we reject the null hypothesis.

conclusion:-

there is sufficient evidence to conclude that the fund has moderate risk at the alpha equals 0.05 level of​ significance.

*** if you have any doubt regarding the problem please write it in the comment box.if you are satisfied please give me a LIKE if possible...