You have decided to invest in a bond fund. You must choose between a taxable und

Question

You have decided to invest in a bond fund. You must choose between a taxable und and a municipal bond und that is at least partially tax-free. Which IS better? The % returns for rando period are given below. Complete parts a through d. Taxable bond funds se e ted funds o the as three-year Full data set 8.91,6.83,9.13, 8.98, 7.72, 10.23, 52, 1.47, 3.83, 1.7,7.28, 5.75, 6.96, 14.14 Municipal bond funds .67, 7.47, 7.43, 7.88, 4.64, 5.37,5.64,4.99,5.5,4.87,5.06,423, 4.86, 2.47, 4.1, 3.37 a) Write the null and alternative hypotheses Let group T correspond to taxable bond funds and group M correspond to municipal bond funds. Complete the hypotheses below. b) Check the conditions. The Randomization Condition is satisfied because the samples are random. The Nearly Normal Condition is satisfied because the taxable bond funds sample is nearly normal and the municipal bond funds sample is nearly normal.

Explanation / Answer

The statistical software output for this problem is:

Two sample T hypothesis test:
1 : Mean of T
2 : Mean of M
1 - 2 : Difference between two means
H0 : 1 - 2 = 0
HA : 1 - 2 0
(without pooled variances)

Hypothesis test results:

Hence,

t = 1.61

P - value = 0.125

No difference; no

Difference Sample Diff. Std. Err. DF T-Stat P-value 1 - 2 1.5999107 0.99423227 18.530771 1.6091921 0.1245

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