Question

Morningstar (www.morningstar.com) selects mutual funds as “Medalist” funds expected to perform well over the long term. You have decided to invest in a bond fund and plan to limit your choice of funds to Morningstar “medalist” funds. But now you must choose between a taxable fund and a municipal bond fund that is at least partially tax-free. Which is better? Here are the % returns for the three-year period leading up to spring of 2013:
Taxable bond funds
10.83, 6.45, 8.52, 10.9, 4.16, 10.48, 6.07, 2.69, 1.24, 1.58, 4.02, 5.64, 6.29, 12.36
Municipal bond funds
8.34, 7.3, 6.07, 6.46, 5.77, 5.89, 5.76, 5.81, 5.12, 5.63, 4.71, 5.22, 5.21, 3.12, 4.77, 2.2
a) Write the null and alternative hypotheses.
b) Check the conditions.
c) Test the hypothesis and find the P-value.
d) Is there a significant difference in 3-year returns between these two kinds of funds?


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  • CreatedMay 15, 2015
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