Purchase Solution

Statistics Test Mutual Funds Question

Not what you're looking for?

Ask Custom Question

Please help with the following statistics test and mutual funds problems. Step by step calculations are given.

Fidelity Magellan is a large cap growth mutual fund and Fidelity Small Cap Stock is a small cap growth mutual fund (Morningstar Funds 500, 2006). The standard deviation for both funds was computed based on a sample size of 26. For Fidelity Magellan, the sample standard deviation is 8.89%; for Fidelity Small Cap Stock, the sample standard deviation is 13.03%. Financial analysts often use the standard deviation as a measure of risk. Conduct a hypothesis test to determine whether the small cap growth fund is riskier than the large cap growth fund. Use an alpha of 0.05 as the level of significance.

Purchase this Solution
Solution Summary

This solution helps with statistics and mutual funds questions. Step by step calculations are given for each.

Solution Preview

Solution:
Let us denote by sigma1^2 and sigma 2^2 the variances for small and large cap growth funds. Then we could test.
Null hypothesis H0: sigma1^2 <= sigma2^2
Alternative ...

Solution provided by:
Changping Wang, MA
Education
  • BSc , Wuhan Univ. China
  • MA, Shandong Univ.
Recent Feedback
  • "Your solution, looks excellent. I recognize things from previous chapters. I have seen the standard deviation formula you used to get 5.154. I do understand the Central Limit Theorem needs the sample size (n) to be greater than 30, we have 100. I do understand the sample mean(s) of the population will follow a normal distribution, and that CLT states the sample mean of population is the population (mean), we have 143.74. But when and WHY do we use the standard deviation formula where you got 5.154. WHEN & Why use standard deviation of the sample mean. I don't understand, why don't we simply use the "100" I understand that standard deviation is the square root of variance. I do understand that the variance is the square of the differences of each sample data value minus the mean. But somehow, why not use 100, why use standard deviation of sample mean? Please help explain."
  • "excellent work"
  • "Thank you so much for all of your help!!! I will be posting another assignment. Please let me know (once posted), if the credits I'm offering is enough or you ! Thanks again!"
  • "Thank you"
  • "Thank you very much for your valuable time and assistance!"
Purchase this Solution
Free BrainMass Quizzes
Terms and Definitions for Statistics

This quiz covers basic terms and definitions of statistics.

Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.

Know Your Statistical Concepts

Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.

Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.

View More Free Quizzes
Related BrainMass Solutions

  • Normal distribution Proportion: Z test

    Question 2 (Basic Business Statistics Tenth Edition, Q 7.55). Mutual funds reported modest earnings in the first quarter of 2004.

  • ANOVA: Mutual Fund Performance

    383929 Simple Statistics Problem for mutual fund performance Mutual funds are classified as large-cap funds, medium cap funds, or small-cap funds, depending ont eh capitalizaiton of the companies in the fund.

  • Correlation vs. Risk

    Following a table of correlations among mutual funds, a reporter adds, "Two funds can have perfect correlation, yet different levels of risk.

  • Problem in Statistical Business Economics

    57016 Problem in Statistical Business Economics Calculate the rate of return for one year (reported in percent) for a sample of 12 mutual funds: 4.634 4.15 4.76 4.70 4.65 4.52 4.70 5.06 4.42 4.51 4.24 4.52.

  • Statistics - Correlation coefficient

    The question is: Can the five-year rate of return be estimated based on the assets of the fund? Nine mutual funds were selected at random, and their assets and rates of return are shown below.

  • Testing of Hypothesis

    Formulate Ho and Ha such that rejection of Ho leads to the conclusion that the load mutual funds have a higher mean annual return over the five-year period. B. Use the 60 mutual funds in the data set Mutual to conduct the hypothesis test.

  • Regression and testing of hypothesis problems

    Construct side-by-side boxplots, forming groups based on the different types of funds. What can you say about risk based on the boxplots? Also, examine descriptive (or summary) statistics separated by type of mutual fund.

  • Intro to Statistics Question

    participating in the mutual funds of investment bankers. B--Obtaining the capital they need to invest.

    Securities markets allow companies to go public in attempts to raise money.

  • Hypothesis Testing, Normality check & Regression Analysis

    (a) Suppose you want to estimate the mean percentage of gain in per share value for growth-type mutual funds over a specific 2-year period. Ten mutual funds are randomly selected from the population of all the commonly listed funds.

View More Related Solutions