A Portfolio Manager Claims That the Mean Annual Return on One

question 96

Essay

A portfolio manager claims that the mean annual return on one of the mutual funds he manages exceeds 8%. To substantiate his claim, he states that over the past 10 years, the mean annual return for the mutual fund has been 9.5% with a sample standard deviation of 1.5%. Assume annual returns are normally distributed.
A) Specify the competing hypotheses to test the portfolio manager's claim.
B) Calculate the value of the test statistic.
C) At the 5% significance level, use the p-value approach to state the decision rule.
D) Is the portfolio manager's claim substantiated by the data? Explain.

• A) Specify the competing hypotheses to test the portfolio manager's claim.
• B) Calculate the value of the test statistic.
• C) At the 5% significance level, use the p-value approach to state the decision rule.
• D) Is the portfolio manager's claim substantiated by the data? Explain.

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Definitions:

Cooperative Strategies

Approaches and tactics employed by businesses or individuals to work together towards mutual goals, often involving partnerships, alliances, or collaborative ventures.

Conflict Management

Involves strategies and practices for effectively addressing and resolving disagreements and disputes within an organization.

Differentiation

The process in organizations of making a product or service stand out as unique in comparison to others in the market.

Incompatible Goals

Incompatible goals describe objectives or aims set by individuals or groups within an organization that conflict with each other, potentially leading to disputes or inefficiencies.