You want to invest some money in a domestic (only U.S. stocks) mutual fund and have narrowed your choice down to value funds or growth funds. Value funds tend to invest in companies that appear to be inexpensive relative to the stock market; growth funds tend to invest in companies that are expected to grow their revenues substantially over time. To help make your decision about which of the two fund types to invest in, you decide to obtain a random sample of 3-year rates of return for 10 different value funds and 10 different growth funds.
(a) We want to compare two means. Because the sample sizes are small, the sample data must come from populations that are normally distributed with no outliers. The normal probability plots for both sets of data are shown. Do the plots indicate that it is reasonable to believe that the sample data come from a population that is normally distributed?
(b) To judge whether the sample data have any outliers and to visualize any differences between the two sample data sets, draw side-by-side boxplots of the data. Are there any outliers?
(c) Conduct the appropriate test to determine if there is any difference in the rate of return between value funds and growth funds. Use the α = 0.05 level of significance.

  • CreatedApril 28, 2015
  • Files Included
Post your question