In a random sample of 38 large cap mutual funds, the average 2016 return is 2.16

ID: 3209571 • Letter: I

Question

In a random sample of 38 large cap mutual funds, the average 2016 return is 2.16% with a standard deviation of 9.08%.

Use Minitab to test at the 5% level whether the average 2016 return for a large cap mutual fund is positive.

One-Sample T

N Mean StDev SE Mean 95% CI

38 0.0216 0.0980 0.0159 (-0.0106, 0.0538)

State your test conclusion in the context of the data and the question being studied.

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Using Minitab, create a graph showing that the test statistic reported by Minitab gives the test p-value.

Based on the given descriptive statistics, we compute test statistics using one sided one sample z test since sample size >30

Hypotheses:

H0: return<=0

Ha: rturn>0

test stat z= 0.0216/(0.098/SQRT(38)) = 1.359

based on this p-value==1-NORM.S.DIST(B3,TRUE) = 0.087 >0.05

we cannot reject H0 and conclude that there is no enough evidence that the return is positive.

Assumptions:

1) sample is iid

2) sample is normally distributed

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