In the world of mutual funds there are two basic types: managed funds and indexed funds. Managed funds are actively managed by a fund manager who is constantly making buy and sell decisions to try to maximize returns. Index funds require very little active management since the securities that comprise an indexed fund are tied closely to the particular mix of securities in a financial index such as the S& P 500. It has been suggested that the psychological profile of people who invest in index funds is different from that of managed fund investors (source: ifa.com / 12steps/). For a random sample of 400 index fund investors and 600 managed fund investors, suppose 260 of the index fund investors indicate that they are “conservative” in most aspects of their life, while 348 of the managed fund investors indicate that they are “conservative.”Use this sample data, and a significance level of 5%, to test the null hypothesis that the proportion of all index fund investors who are “conservative” is the same as the proportion of all managed fund investors who are “conservative.”Report and explain your decision.
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