SOLUTION: a financial planner wants to compare the yield of income and growth oriented mutual funds. Fifty thousand dollars is invested in each of a sample of 35 income oriented and 40 grow

Question 179268: a financial planner wants to compare the yield of income and growth oriented mutual funds. Fifty thousand dollars is invested in each of a sample of 35 income oriented and 40 growth oriented funds. The mean increase for a two- year period for the income fund is $1100. For the growth oriented funds the mean increase is $1090. At the 0.01 significance level is there a difference in the mean yield of the two funds? Assume that the standard deviation 1=$45 and standard deviation 2 =$55.
I have a very hard time understanding this.
We do not have a textbook for this.
I am to a. State the null and alternative hypothesis
Ho and H1
b. state the decision rule.
c. compute the value of the test statistic
d. Compute the p-value.
e. state the decision of the null hypothesis
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
a financial planner wants to compare the yield of income and growth oriented mutual funds. Fifty thousand dollars is invested in each of a sample of 35 income oriented and 40 growth oriented funds. The mean increase for a two- year period for the income fund is $1100. For the growth oriented funds the mean increase is $1090. At the 0.01 significance level is there a difference in the mean yield of the two funds? Assume that the standard deviation 1=$45 and standard deviation 2 =$55.
-----------------------------------------
I have a very hard time understanding this.
We do not have a textbook for this.
I am to:
a. State the null and alternative hypothesis.
You have two samples with mean information so use a 2-sample Z-Test.
Ho: u1-u2 = 0
H1: u1-u2 is not equal to zero
--------------------------
b. state the decision rule.
If the test statistic is lee than -2.576 or greater than 2.576, reject Ho.
----------------------------------
c. compute the value of the test statistic
z(1100-1090) = (1100-1090)/sqrt[(45^2/35) + (55^2/40) = 0.8655
------------------------------------]
d. Compute the p-value.
p-value = 2*P(z > 0.8655)) = 2* = 38.68%
--------------------------------------------
e. state the decision of the null hypothesis
Conclusion: Since p-value is greater than 1%, Fail to reject Ho.
=====================================================================
Cheers,
Stan H.

RELATED QUESTIONS
3. A financial planner wants to compare the yield of income and growth oriented mutual... (answered by stanbon)

Fidelity Magellan is a large cap growth mutual fund and Fidelity Small Cap Stock is a... (answered by stanbon)

An investor went for financial advice. Their financial adviser said they could get them... (answered by richwmiller)

Assume that the population standard deviations are equal for income mutula funds and... (answered by stanbon)

A rollover IRA of $18,050 was invested in two mutual funds, one earning 12% interest and... (answered by ikleyn,MathLover1,greenestamps)

Can you help me solve this problem Please. David has fourteen thousand dollars to invest (answered by stanbon)

Market research in a particular city indicated that during a week 18% of all adults watch (answered by stanbon)

A financial planner invested a certain sum at 9%, twice that amount at 10%, and three... (answered by josgarithmetic)

David received an inheritance of $50,000. His financial advisor suggests that he invest... (answered by ikleyn)