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:

Life Expectancy

The average period that a person may expect to live, which varies across different countries and is influenced by factors such as healthcare, lifestyle, and genetics.

Old-age Insurance

A government or private financial program designed to provide income to individuals during their retirement years, aiming to ensure financial security for the elderly.

Federal Government

The national government of a federation that has specific powers delineated by a constitution, distinct from state or provincial governments.

Work Force

The group of individuals who are capable of working and are either employed or actively seeking employment in a given country or region.