As of mid-June 2009, five U.S. Government Bond mutual funds were reported as having generated the 1-year and 3-year (annualized) rates of return shown below.

a. Determine the least-squares regression line and interpret its slope.
b. For a U.S. Government Bond mutual fund with a 3-year annualized rate of return of 5.0%, estimate the 1-year rate of return.
c. For a U.S. Government Bond mutual fund with a 3-year annualized rate of return of 7.0%, estimate the 1-year rate of return.

U.S Government Bond Fund x = 3-Year Annualized Rate of Return 6.3% 7.4 6.5 2.4 7.2 y 1-Year Rate of Return American Funds, AMUSX Fidelity, FGOvx Wells Fargo, STVSX Morgan Stanley, USGBX MFS Govt. Securities, MFGSX 7.1% 8.4 7.3 1.5 9.0