The average annual total return for U.S. Diversified Equity mutual funds from 1999 to 2003 was 4.1%. A researcher would like to conduct a hypothesis test to see whether the returns for mid-cap growth funds over the same period are significantly different from the average for U.S. Diversified Equity funds. A sample of 40 mid- cap growth funds provides a mean return of 3.4%. Assume that the population standard deviation for mid-cap growth funds is known from previous studies to be 2%.

1A

At the 0.05 level of significance, using the Critical Value Using Z Method, determine whether the mean annual return for mid-cap growth funds differs from the mean for U.S. Diversified Equity funds. Make sure that you state the null and alternative hypotheses.