Question

Colonial Funds claims to have a bond fund which has performed consistently throughout the past year. The variance of the share price is claimed to be 0.16. To test this claim, an investor randomly selects 12 days during the last year to check the performance of the fund. He finds an average share price of $8.80 with a standard deviation of 0.3446. Can the investor conclude that the variance of the share price of the bond fund is different than claimed at α=0.05? Assume the population is normally distributed.

Step 1 of 5 : State the null and alternative hypotheses. Round to four decimal places when necessary.

Step 2 of 5: Determine the critical value(s) of the test statistic. If the test is two-tailed, separate the values with a comma. Round your answer to three decimal places.

Step 3 of 5: Determine the value of the test statistic. Round your answer to three decimal places.

Step 4 of 5: Make the decision. A: Reject Null Hypothesis B: Fail to Reject Null Hypothesis

Step 5 of 5: What is the conclusion? There is sufficient evidence to show that the amount of active ingredient has a variance that is less than the desired amount. There is not sufficient evidence to show that the amount of active ingredient has a variance that is less than the desired amount.

Answer 1

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