Question

Suppose a mutual fund qualifies as having moderate risk if the standard deviation of its monthly rate of return is less than 66​%. A​ mutual-fund rating agency randomly selects 28 months and determines the rate of return for a certain fund. The standard deviation of the rate of return is computed to be 2.82%. Is there sufficient evidence to conclude that the fund has moderate risk at the alpha = 0.10 level of significance?

Answer 1

There is not sufficient evidence to conclude that the fund has moderate risk at the a = 0.01 level of significance

Explanation:

H0: sigma= 66%

Ha:sigma < 66%

Chi square =(28-1)*2.82^2/66^2=0.049

p value =0.286

as p value>0.01 we do not can reject H0

So there is not sufficient evidence to conclude that the fund has moderate risk at the a = 0.01 level of significance