Question

Companies often have different mutual funds to serve different investment time horizons. Use the tab titled BESTFUNDS to determine if there is a difference between in the three-year annualized return for small cap growth, mid-cap growth, and large cap growth mutual funds. (a) Identify which type of test you plan to use and why. (b) Analyze and report your findings. (c) Put the findings into meaningful words (i.e., explain what the test allows you to conclude about the types of mutual funds). (d) Does your result from (b) give you statistical permission to probe group differences, yes or no?

Small	Mid-Cap	Large
29.21	1.34	23.08
21.33	21.59	10.80
25.19	22.01	16.87
25.96	20.41	5.53
24.05	20.90	24.40
22.36	20.96	18.33
28.89	21.92	22.52
26.58	20.81	21.99
27.18	22.22	21.06
21.25	20.44	23.91

Answer 1

Companies often have different mutual funds to serve different investment time horizons. Use the tab titled BESTFUNDS to determine if there is a difference between in the three-year annualized return for small cap growth, mid-cap growth, and large cap growth mutual funds. (a) Identify which type of test you plan to use and why.

(a) Identify which type of test you plan to use and why.

Here we have to test three groups so we can use one way anova.

(b) Analyze and report your findings.

Here we have to test the hypothesis that,

H0 : mu1 = mu2 = mu3

H1 : Atleast one of the population mean is differ than 0.

Assume alpha = level of significance = 0.05

We can do one way ANOVA in excel.

syntax :

ENTER data into excel sheet --> Data --> Data analysis --> Anova : SIngle factor --> ok --> Input range : Select all the data together --> Grouped by : Columns --> Labels in first row --> Alpha : 0.05 --> Output range : Select one empty cell --> ok

The test statistic follows F-distribution.

F = 4.34

P_value = 0.0232

P-value < alpha

Reject H0 at 5% level of significance.

COnclusion : There is sufficient evidence to say that three population means differ.

(c) Put the findings into meaningful words (i.e., explain what the test allows you to conclude about the types of mutual funds).

There is significant evidence to say that difference between in the three-year annualized return for small cap growth, mid-cap growth, and large cap growth mutual funds.

(d) Does your result from (b) give you statistical permission to probe group differences, yes or no?

Yes