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 €œreturn€ at a given maturity level) and explain its meaning.
e. Is there a significant relationship between maturity and return? How do you know?

TABLE 11.3.15 Short-Term Bond Funds Fund Strong Short-Term Bond Fund DFA One Year Fixed-Income Maturity Return 1.11 Portfolio 0.76 5.54 Scudder Target Government Zero-Coupon 1990 AI Reserve Fund Scudder Target Fund General 1990 Vanguard Fixed-Income 2.3 0.4 1.9 5.01 4.96 4.86 Short-Term Bond Portfolio 2.3 4.86 Criterion Limited-Term Institutional Trust 1.3 4.8 Franklin Series Trust Short-Int. U.S. Govt 2 4.64 Benham Target Maturities Trust-Series 1990 2.3 4.62 Delaware Treasury Reserves Investors Senes 2.84 4.35