An Analyst Conducts a Hypothesis Test to Check Whether the Mean

question 51

Multiple Choice

An analyst conducts a hypothesis test to check whether the mean return for a particular fund differs from 10%.He assumes that returns are normally distributed and sets up the following competing hypotheses: Over the past 10 years the fund has had an average annual return of 13.4% with a standard deviation of 2.6%.The value of the test statistic is 4.14 and the critical values at the 5% significance level are -2.262 and 2.262.The correct decision is to __________.

• A)Reject H₀;we can conclude that the mean differs from 10%
• B)Reject H₀;we cannot conclude that the mean differs from 10%
• C)Do not reject H₀;we can conclude that the mean differs from 10%
• D)Do not reject H₀;we cannot conclude that the mean differs from 10%

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Definitions:

Overconfident

Characterized by an overly strong belief in one's abilities or outcomes, often more than is warranted by the reality.

Mathematical Skills

Abilities related to understanding, analyzing, and working with numbers and mathematical concepts.

Self-Serving Bias

The common tendency to attribute successes to personal characteristics and failures to external factors.

Exaggerated Feelings

Intense emotional responses that are disproportionate to the situation at hand.