17. A portfolio manager claims that the mean annual return on one of the mutual funds he manages exceeds 8%. To substantiate his claim, he states that over the past 10 years, the mean annual return for the mutual fund has been 9.5%, with a sample standard deviation of 1.5%. Assume annual returns are normally distributed. 1) Specify the competing hypotheses to test the portfolio manager's claim. 2) Calculate the value of the test statistic. L 3) At the 5% significance level, use the p-value approach to state the decision rule.

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17. A portfolio manager claims that the mean annual return on one of the mutual funds he manages
exceeds 8%. To substantiate his claim, he states that over the past 10 years, the mean annual
return for the mutual fund has been 9.5%, with a sample standard deviation of 1.5%. Assume
annual returns are normally distributed.
1) Specify the competing hypotheses to test the portfolio manager's claim.
2) Calculate the value of the test statistic.
L
3) At the 5% significance level, use the p-value approach to state the decision rule.
4) Is the portfolio manager's claim substantiated by the data? Explain.
Transcribed Image Text:17. A portfolio manager claims that the mean annual return on one of the mutual funds he manages exceeds 8%. To substantiate his claim, he states that over the past 10 years, the mean annual return for the mutual fund has been 9.5%, with a sample standard deviation of 1.5%. Assume annual returns are normally distributed. 1) Specify the competing hypotheses to test the portfolio manager's claim. 2) Calculate the value of the test statistic. L 3) At the 5% significance level, use the p-value approach to state the decision rule. 4) Is the portfolio manager's claim substantiated by the data? Explain.
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