Mutual funds are classified as load or no-load funds. Load funds require an investor to pay an initial fee based on a percentage of the amount invested in the fund. The no-load funds do not require this initial fee. Some financial advisors argue that the load mutual funds may be worth the extra fee because these funds provide a higher mean rate of return than the no-load mutual funds. A sample of 30 load mutual funds and a sample of 30 no-load mutual funds were selected. Data were collected on the annual return for the funds over a five-year period. The data are contained in the data set Mutual. The data for the first five load and first five no-load mutual funds are as follows:
A. 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. What is the p-value? At a=0.05 what is your conclusion?
The solution describes a testing of hypothesis problem using Excel.