A Financial Analyst Examines the Performance of Two Mutual Funds

question 10

Multiple Choice

A financial analyst examines the performance of two mutual funds and claims that the variances of the annual returns for the bond funds differ.To support his claim,he collects data on the annual returns (in percent) for the years 2001 through 2010.The analyst assumes that the annual returns for the two emerging market bond funds are normally distributed.Use the following summary statistics. For the competing hypotheses which of the following is the correct approximation of the p-value?

• A) Less than 0.01
• B) Between 0.01 and 0.025
• C) Between 0.02 and 0.05
• D) Between 0.05 and 0.10

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Definitions:

Cash Outflows

Money that is spent or transferred out of a business, usually as a result of operational expenses, investments, or financing activities.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Time Value

A financial principle acknowledging that receiving money now is more advantageous than receiving the same amount in the future due to its earning potential.

Payback Method

A capital budgeting technique that calculates the time required to recoup the initial investment through cash inflows.