Colonial Funds claims to have a bond fund which has maintained a mean share price of $12.00. They claim that the standard deviation of the share price is 0.22. To test this claim, the investor randomly selects 25 days during the last year. He finds an average share price of $11.80 with a standard deviation of 0.0931. Can the investor conclude that the share price of the bond fund varies by less than Colonial Funds claims at α=0.05? Step 1 of 5: State the hypotheses in terms of the standard deviation. Round the standard deviation to four decimal places when necessary. Step 2 of 5: Determine the critical value(s) of the test statistic. If the test is two-tailed, separate the values with a comma. Round your answer to three decimal places. Step 3 of 5: Determine the value of the test statistic. Round your answer to three decimal places. Step 4 of 5: Make the decision. Step 5 of 5: What is the conclusion?
Colonial Funds claims to have a bond fund which has maintained a mean share price of $12.00. They claim that the standard deviation of the share price is 0.22. To test this claim, the investor randomly selects 25 days during the last year. He finds an average share price of $11.80 with a standard deviation of 0.0931. Can the investor conclude that the share price of the bond fund varies by less than Colonial Funds claims at α=0.05?
State the hypotheses in terms of the standard deviation. Round the standard deviation to four decimal places when necessary.
Determine the critical value(s) of the test statistic. If the test is two-tailed, separate the values with a comma. Round your answer to three decimal places.
Determine the value of the test statistic. Round your answer to three decimal places.
Make the decision.
What is the conclusion?
The detailed solution of this question is given in Step 2.
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