A Financial Planner Wants to Compare the Yield of Income

question 65

Essay

A financial planner wants to compare the yield of income and growth mutual funds. Fifty thousand dollars is invested in each of a sample of 35 income and 40 growth funds. The mean increase for a two-year period for the income funds is $900. For the growth funds, the mean increase is $875. Income funds have a sample standard deviation of $35; growth funds have a sample standard deviation of $45. Assume that the population standard deviations are equal. At the 0.05 significance level, is there a difference in the mean yields of the two funds?
What decision is made about the null hypothesis using an α = 0.05?

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Definitions:

Batholith

A large mass of intrusive igneous rock, commonly granite, that has solidified deep within the earth's crust.

Granite

Granite is a coarse-grained igneous rock composed mainly of quartz, feldspar, and mica, widely used in construction due to its durability.

Volcanic Neck

A vertical column of volcanic rock, formed by magma solidifying in the vent of an inactive volcano.

Igneous Feature

A geological structure formed from hardened lava or magma, such as a volcano or granite intrusion.