# Question

Table 11.3.15 compares short-term bond funds, showing the average maturity (in years until the fund’s bonds mature) and the rate of return as a percentage.

a. Find the correlation between maturity and return and interpret it.

b. Find the least-squares regression equation to predict return from maturity.

c. What rate of return would you expect for a fund with a current maturity of exactly one year?

d. Find the standard error of prediction (for predicting “return” at a given maturity level) and explain its meaning.

e. Is there a significant relationship between maturity and return? How do you know?

a. Find the correlation between maturity and return and interpret it.

b. Find the least-squares regression equation to predict return from maturity.

c. What rate of return would you expect for a fund with a current maturity of exactly one year?

d. Find the standard error of prediction (for predicting “return” at a given maturity level) and explain its meaning.

e. Is there a significant relationship between maturity and return? How do you know?

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