A Portfolio Manager Claims That the Mean Annual Return on One

question 81

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 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:

Management Theory

A collection of ideas and principles that outline how managers should approach organizational leadership, planning, and decision-making.

Union Constitution

A document that outlines the governing principles, rules, and procedures of a labor union, including membership rights and duties.

Election Procedures

The formal processes and rules established for conducting elections, including how votes are cast, counted, and how the outcomes are determined.

Union Density

A measure of the proportion of workers who are union members, usually expressed as a percentage of the total workforce.