suppose a mutual fund qualifies as having a moderate risk if the standard deviat

Question

suppose a mutual fund qualifies as having a moderate risk if the standard deviation of its monthly rate of return is less than 3%. a mutual fund rating agency randomly selects 27 months and determines the rate of return for a certain fund. the standard deviation of the rate of return is computed to be 1.97% is there sufficient evidence to conclude that the fund has moderate risk at the a=.05 level of significance? a normal probability plot indicates that the monthly rates of return are normally distributed.

what are thr correct hyptheses for this test?

the null hypthesis is H0: p,o,u    ___ 0.0197 or .03

the alternative hypothesis is h1: o,u,p ___ .03 or 0.0197.

Explanation / Answer

The null hypothesis H0 : std.deviation (O) = .03

The alternative hypothesis H1 : std.deviation (O) < .03

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