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

Question

You have decided to invest in a bond fund. You must choose between a taxable fund and a municipal bond fund that is at least partially tax-free. Which is better? The % returns for randomly selected funds for the last three-year period are given below. Complete parts a through d. Full data set Taxable bond funds 8.43, 6.28, 8.04, 10.97, 5.7, 9.2, 7.19, 1.59, 0.74, 0.43, 5.09, 7.23, 4.8, 12.77 Municipal bond funds 8.47, 7.48, 7.5, 6.95, 4.51, 4.82, 5.62, 4.25, 4.99, 5.05, 4.02, 4.52, 5.29, 3.01, 4.16, 2.45 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 The Independent Group Assumption is satisfied c) Test the hypothesis and find the P-value. The test statistic is Round to two decimal places as needed.) 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,

Test statistic = 1.06

P = 0.302

Difference Sample Diff. Std. Err. DF T-Stat P-value 1 - 2 1.1254464 1.0593745 17.635373 1.0623688 0.3024

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