A Portfolio Manager Claims That the Mean Annual Return on One

question 97

Essay

A portfolio manager claims that the mean annual return on one of the mutual funds he manages exceeds 8%.In order 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 critical 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 critical value approach to state the decision rule.
• D)Is the portfolio manager's claim substantiated by the data? Explain.

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Definitions:

Partnership Agreement

A legal document detailing the terms of a partnership, including the rights, responsibilities, and share of profits for each partner.

Consent

Agreement or permission given by a person with full knowledge of the risks involved and the implications of their decisions.

Partnership

A legal form of business operation between two or more individuals who share management and profits.

UPA

Uniform Partnership Act, which governs the operation of partnerships within the United States.