15. India Fund, Inc. (IFN) is a d o s e - e n d e d eq u i ty mutual fund laun ch ed by th e Blackstone Group, A s s e t Ma n a g emen t Arm. Al th ou gh it promis e s impre s s ive returns, it d o e s s o a t th e c o s t o f gr eater risk. An analys t w ou ld like to t e s t if th e variance o f th e returns for IFN is gr eater than 1,000(%)2. He u s e s th e fo l lowin g samp l e data to te s t his c laim at a 5% level o f s ignif icance.

2001 2002 2003 2004 2005 2006 2007

− 28.33% 7.87% 1 4 0 . 6 3 % 3 0 . 9 1 % 63.35% − 2.78% 58.30%

a . S t a t e t h e c o m p e t i n g h y p o t h e s e s .

b . C o m p u t e t h e v a l u e o f t h e t e s t s t a t i s t i c . W h a t a s s u m p t i o n r e g a r d i n g t h e I F N r e t u r n s d i d y o u m a k e ?

c. Given α = 0.05, spe ci fy th e critical value(s).

d. Is th e variance o f returns gr eater th an 1,000(% )2?