Question

Listed below is the annual rate of return (reported in percent) for a sample of 12 taxable mutual funds.

4.63	4.15	4.76	4.70	4.65	4.52	4.70	5.06	4.42	4.51	4.24	4.52

Using the 0.05 significance level, is it reasonable to conclude that the mean rate of return is more than 4.50%?

1. What is the decision rule? (Round your answer to 3 decimal places.)

reject H0: u < 4.5% and conclude that u > 4.5% when the test statistic is ( less than, greater than, or equal to) _____

2. Compute the value of the test statistic. (Round your answer to 3 decimal places.)

value of the test statistic: ______

3. What is your decision regarding H₀?

(reject or do not reject) the mean rate of return is (more than or not more than) 4.5%

Answer 1

(a) greater than 1.796

(b) 1.033

(c)

(do not reject) the mean rate of return is ( not more than) 4.5%