Mr. Raj, an investor, has narrowed his search for a mutual fund down to the Oppy fund or the MLPFS fund. Oppy’s rate of return is lower, but seems to be more stable than MLPFS’s. If Oppy’s variability in rate of return is signifi cantly lower than MLPFS’s, then he will invest his money there. If there is no signifi cant difference in variability, he’ll go with MLPFS. To make a decision, Mr. Raj has taken a sample of 21 monthly rates of return for both fi rms. For Oppy, the standard deviation was 2, and for MLPFS, the standard deviation was 3. Which fi rm should Mr. Raj invest in? Test at the α = 0.05 level.
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