Answered: Suppose a mutual fund qualifies as…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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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

months and determines the rate of return for a certain fund. The standard deviation of the rate of return is computed to be

4.47%.

Is there sufficient evidence to conclude that the fund has moderate risk at the

alpha equals 0.10α=0.10

level of significance? A normal probability plot indicates that the monthly rates of return are normally distributed.

What are the correct hypotheses for this test?

The null hypothesis is

H0:

sigmaσ

equals=

0.06.

The alternative hypothesis is

H1:

sigmaσ

less than<

0.06.

Calculate the value of the test statistic.

chi squared χ2equals=???

(Round to three decimal places as needed.)

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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