Chapter 10: Q. 10.95 (page 430)

A mutual fund is a professionally managed investment that can be sold to the general public. Mutual funds can be specialized into different categories such as healthcare-related or technology related mutual funds. The following table lists the \(3-\)months rate of return in percent for samples of healthcare related and technology related mutual funds, as reported by Morningstar an independent investment research company.
Use the technology of your choice to answer the following questions. Explain your answer.
a. If you had to choose between the use of pooled \(t-\)procedures and non-pooled \(t-\)procedures here, which would you choose?
b. Is it reasonable to use the type of procedure that you selected in part (a)?

Short Answer

Expert verified

Part a. The non pooled \(t\)-procedure is choose.

Part b. No, it is not reasonable to use the type of procedure in part (a) because the distribution of healthcare is not normally distributed. More ever, the health care data contains a outlier.

Step by step solution

Part a. Step 1. Explanation

The normal probability is shown below,

And,

The output graph is shown below,

From the output, the standard deviation value of the health care is \(4.68\) and that for technology is \(1.504\). this indicated standard deviation is larger for health care. So, it is possible to use \(t\)-procedure.

Part b. Step 1. Explanation

No, it is not reasonable to use the type of procedure in part (a) because the distribution of healthcare is not normally distributed. More ever, the health care data contains a outlier.