Question

We are studying mutual bond funds for the purpose of investing in several funds. For this particular study, we want to focus on the assets of a fund and its five-year performance. The question is: Can the five-year rate of return be estimated based on the assets of the fund? Nine mutual funds were selected at random, and their assets and rates of return are shown below.

	Assets				Return						Assets				Return
Fund	($ millions)				(%)				Fund		($ millions)				(%)
AARP High Quality Bond	$	622.2				10.8				MFS Bond A	$	494.5				11.6
Babson Bond L		160.4				11.3				Nichols Income		158.3				9.5
Compass Capital Fixed Income		275.7				11.4				T. Rowe Price Short-term		681.0				8.2
Galaxy Bond Retail		433.2				9.1				Thompson Income B		241.3				6.8
Keystone Custodian B-1		437.9				9.2

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State the decision rule for 0.05 significance level: H₀: β ≥ 0   H₁: β < 0 (Negative value should be indicated by a minus sign. Round your answer to 3 decimal places.)

Compute the value of the test statistic. (Negative value should be indicated by a minus sign. Round your answer to 3 decimal places.)

The regression equation is yˆ=9.9198−0.00039xy^=9.9198-0.00039x , the sample size is 9, and the standard error of the slope is 0.0032. Use the 0.05 significance level. Can we conclude that the slope of the regression line is less than zero?

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Answer 1

Reject Ho if t < -2.365

t = -0.122

an we conclude that the slope of the regression line is less than zero?

No

	r²	0.002
	r	-0.046
	Std. Error	1.752
	n	9
	k	1
	Dep. Var.	y
ANOVA table
Source	SS	df	MS	F	p-value
Regression	0.0457	1	0.0457	0.01	.9064
Residual	21.4943	7	3.0706
Total	21.5400	8
Regression output				confidence interval
variables	coefficients	std. error	t (df=7)	p-value	95% lower	95% upper
Intercept	9.9198
x	-0.00039334	0.0032	-0.122	.9064	-0.00801901	0.00723234