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Independent sample t test for financial planner

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1. A financial planner wants to compare the yield of income- and growth-oriented mutual funds. Fifty thousand dollars is invested in each of a sample of 35 income-oriented and 40 growth-oriented funds. The mean increase for a two-year period for the income funds is $1100 with a standard deviation of $45. For the growth‑oriented funds the mean increase is $1090 with a standard deviation of $55. At the 0.01 significance level is there a difference in the mean yield of the two funds?

a. State the null and alternate hypotheses.

H0:
H1:

b. State the decision rule.

c. Compute the value of the test statistic.

d. Compute the p-value.

e. What is your decision regarding the null hypothesis?

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Solution Summary

This solution provides a step by step method for the calculation of the t statistic. The formula for the calculation and interpretations of the results are also included.

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A financial planner wants to compare the yield of income- and growth-oriented mutual funds. Fifty thousand dollars is invested in each of a sample of 35 income-oriented and 40 growth-oriented funds. The mean increase for a two-year period for the income funds is $1100 with a standard deviation of $45. For the growth oriented funds the mean increase is $1090 with a standard deviation of $55. At the 0.01 ...

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