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StatisticsStatistics for Business & Economics, Revised (MindTap Course List)A portion of a data set containing information for 45 mutual funds that are part of the Morningstar Funds 500 follows. The complete data set is available in the file named MutualFunds. The data set includes the following five variables: Fund Type: The type of fund, labeled DE (Domestic Equity), IE (International Equity), and FI (Fixed Income). Net Asset Value ($): The closing price per share on December 31, 2007. 5-Year Average Return (%): The average annual return for the fund over the past five years. Expense Ratio (%): The percentage of assets deducted each fiscal year for fund expenses. Morningstar Rank: The risk adjusted star rating for each fund; Morningstar ranks go from a low of 1-Star to a high of 5-Stars. Fund Name Fund Type Net Asset Value ($) 5-Year Average Return (%) Expense Ratio (%) Morningstar Rank Amer Cent Inc & Growth Inv DE 28.88 12.39 .67 2-Star American Century Intl. Disc IE 14.37 30.53 1.41 3-Star American Century Tax-Free Bond FI 10.73 3.34 .49 4-Star American Century Ultra DE 24.94 10.88 .99 3-Star Ariel DE 46.39 11.32 1.03 2-Star Artisan Intl Val IE 25.52 24.95 1.23 3-Star Artisan Small Cap DE 16.92 15.67 1.18 3-Star Baron Asset DE 50.67 16.77 1.31 5-Star Brandywine DE 36.58 18.14 1.08 4-Star . . . . . . . . . . . . . . . . . . a. Develop an estimated regression equation that can be used to predict the 5-year average return given the type of fund. At the .05 level of significance, test for a significant relationship. b. Did the estimated regression equation developed in part (a) provide a good fit to the data? Explain. c. Develop the estimated regression equation that can be used to predict the 5-year average return given the type of fund, the net asset value, and the expense ratio. At the .05 level of significance, test for a significant relationship. Do you think any variables should be deleted from the estimated regression equation? Explain. d. Morningstar Rank is a categorical variable. Because the data set contains only funds with four ranks (2-Star through 5-Star), use the following dummy variables: 3Star-Rank = 1 for a 3-Star fund, 0 otherwise; 4StarRank = 1 for a 4-Star fund, 0 otherwise; and 5StarRank = 1 for a 5-Star fund, 0 otherwise. Develop an estimated regression equation that can be used to predict the 5-year average return given the type of fund, the expense ratio, and the Morningstar Rank. Using a = .05, remove any independent variables that are not significant. e. Use the estimated regression equation developed in part (d) to predict the 5-year average return for a domestic equity fund with an expense ratio of 1.05% and a 3-Star Morningstar Rank.BuyFind*arrow_forward*

12th Edition

David R. Anderson + 4 others

Publisher: South-Western College Pub

ISBN: 9781285846323

Chapter 15, Problem 56SE

Textbook Problem

A portion of a data set containing information for 45 mutual funds that are part of the *Morningstar Funds 500* follows. The complete data set is available in the file named MutualFunds. The data set includes the following five variables:

Fund Type: The type of fund, labeled DE (Domestic Equity), IE (International Equity), and FI (Fixed Income).

Net Asset Value ($): The closing price per share on December 31, 2007.

5-Year Average Return (%): The average annual return for the fund over the past five years. Expense Ratio (%): The percentage of assets deducted each fiscal year for fund expenses. Morningstar Rank: The risk adjusted star rating for each fund; Morningstar ranks go from a low of 1-Star to a high of 5-Stars.

Fund Name |
Fund Type |
Net Asset Value ($) |
5-Year Average Return (%) |
Expense Ratio (%) |
Morningstar Rank |

Amer Cent Inc & Growth Inv | DE | 28.88 | 12.39 | .67 | 2-Star |

American Century Intl. Disc | IE | 14.37 | 30.53 | 1.41 | 3-Star |

American Century Tax-Free Bond | FI | 10.73 | 3.34 | .49 | 4-Star |

American Century Ultra | DE | 24.94 | 10.88 | .99 | 3-Star |

Ariel | DE | 46.39 | 11.32 | 1.03 | 2-Star |

Artisan Intl Val | IE | 25.52 | 24.95 | 1.23 | 3-Star |

Artisan Small Cap | DE | 16.92 | 15.67 | 1.18 | 3-Star |

Baron Asset | DE | 50.67 | 16.77 | 1.31 | 5-Star |

Brandywine | DE | 36.58 | 18.14 | 1.08 | 4-Star |

. | . | . | . | . | . |

. | . | . | . | . | . |

. | . | . | . | . | . |

- a. Develop an estimated regression equation that can be used to predict the 5-year average return given the type of fund. At the .05 level of significance, test for a significant relationship.
- b. Did the estimated regression equation developed in part (a) provide a good fit to the data? Explain.
- c. Develop the estimated regression equation that can be used to predict the 5-year average return given the type of fund, the net asset value, and the expense ratio. At the .05 level of significance, test for a significant relationship. Do you think any variables should be deleted from the estimated regression equation? Explain.
- d. Morningstar Rank is a categorical variable. Because the data set contains only funds with four ranks (2-Star through 5-Star), use the following dummy variables: 3Star-Rank = 1 for a 3-Star fund, 0 otherwise; 4StarRank = 1 for a 4-Star fund, 0 otherwise; and 5StarRank = 1 for a 5-Star fund, 0 otherwise. Develop an estimated regression equation that can be used to predict the 5-year average return given the type of fund, the expense ratio, and the Morningstar Rank. Using
*a*= .05, remove any independent variables that are not significant. - e. Use the estimated regression equation developed in part (d) to predict the 5-year average return for a domestic equity fund with an expense ratio of 1.05% and a 3-Star Morningstar Rank.

Statistics for Business & Economics, Revised (MindTap Course List)

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Ch. 15.2 - The estimated regression equation for a model...Ch. 15.2 - Consider the following data for a dependent...Ch. 15.2 - In a regression analysis involving 30...Ch. 15.2 - A shoe store developed the following estimated...Ch. 15.2 - The owner of Showtime Movie Theaters, Inc., would...Ch. 15.2 - The National Football League (NFL) records a...Ch. 15.2 - PC World rated four component characteristics for...Ch. 15.2 - The Cond Nast Traveler Gold List provides ratings...Ch. 15.2 - Waterskiing and wakeboarding are two popular...Ch. 15.2 - Major League Baseball (MLB) consists of teams that...

Ch. 15.3 - In exercise 1, the following estimated regression...Ch. 15.3 - In exercise 2, 10 observations were provided for a...Ch. 15.3 - In exercise 3, the following estimated regression...Ch. 15.3 - In exercise 4, the following estimated regression...Ch. 15.3 - In exercise 5, the owner of Showtime Movie...Ch. 15.3 - In exercise 6, data were given on the average...Ch. 15.3 - In exercise 9, an estimated regression equation...Ch. 15.3 - Refer to exercise 10, where Major League Baseball...Ch. 15.5 - In exercise 1, the following estimated regression...Ch. 15.5 - Refer to the data presented in exercise 2. The...Ch. 15.5 - The following estimated regression equation was...Ch. 15.5 - In exercise 4, the following estimated regression...Ch. 15.5 - Refer to exercise 5. a. Use = .01 to test the...Ch. 15.5 - The Wall Street Journal conducted a study of...Ch. 15.5 - The Cond Nast Traveler Gold List for 2012 provided...Ch. 15.5 - In exercise 10, data showing the values of several...Ch. 15.6 - In exercise 1, the following estimated regression...Ch. 15.6 - Refer to the data in exercise 2. The estimated...Ch. 15.6 - In exercise 5, the owner of Showtime Movie...Ch. 15.6 - In exercise 9 an estimated regression equation was...Ch. 15.6 - The American Association of Individual Investors...Ch. 15.7 - Consider a regression study involving a dependent...Ch. 15.7 - Consider a regression study involving a dependent...Ch. 15.7 - Management proposed the following regression model...Ch. 15.7 - Refer to the Johnson Filtration problem introduced...Ch. 15.7 - This problem is an extension of the situation...Ch. 15.7 - The Consumer Reports Restaurant Customer...Ch. 15.7 - A 10-year study conducted by the American Heart...Ch. 15.8 - Data for two variables, x and y, follow. xi 1 2 3...Ch. 15.8 - Data for two variables, x and y, follow. xi 22 24...Ch. 15.8 - Exercise 5 gave the following data on weekly gross...Ch. 15.8 - The following data show the curb weight,...Ch. 15.8 - The Ladies Professional Golfers Association (LPGA)...Ch. 15.9 - Refer to the Simmons Stores example introduced in...Ch. 15.9 - In Table 15.12 we provided estimates of the...Ch. 15.9 - Community Bank would like to increase the number...Ch. 15.9 - Over the past few years the percentage of students...Ch. 15.9 - The Tire Rack maintains an independent consumer...Ch. 15 - The admissions officer for Clearwater College...Ch. 15 - The personnel director for Electronics Associates...Ch. 15 - A partial computer output from a regression...Ch. 15 - Recall that in exercise 49, the admissions officer...Ch. 15 - Recall that in exercise 50 the personnel director...Ch. 15 - The Tire Rack, Americas leading online distributor...Ch. 15 - The Department of Energy and the U.S....Ch. 15 - A portion of a data set containing information for...Ch. 15 - Fortune magazine publishes an annual list of the...Ch. 15 - Consumer Research, Inc., is an independent agency...Ch. 15 - Matt Kenseth won the 2012 Daytona 500, the most...Ch. 15 - Finding the Best Car Value When trying to decide...

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