1. [10] Mutual funds are classified as load or no-load funds. Load funds require an investor to pay an initial fee based on a percentage of the amount invested in the fund. The no load funds do not require this initial fee. Some financial advisors argue that the load mutual funds may be worth the extra fee because these funds provide a higher mean rate of return than the no-load mutual funds. A sample of 30 load and 30 no-load funds were selected. Data were collected on the annual return for the funds over a five-year period. The data are contained in the data set Mutual. Conduct an appropriate hypothesis test to determinewhether the load funds have a higher mean annual return over the five-year period. Include the error you might be committing.

1. [2 marks]

2. [6 marks for calculations]

3. [3] Suppose that it is generally accepted that the variance in returns for the Mutual question is considered equal for no-load and load funds. Redo your calculations as necessary.

A 1 Mutual Funds - Load 2 American National Growth 3 Arch Small Cap Equity 4 Bartlett Cap Basic 5 Calvert World International 6 Colonial Fund A 7 Common Sense Growth 8 Corefund Core Equity 9 Davis Convert Seurities 10 Deleware Small Cap 11 Dreyfus Premium Value 12 Federated Stocks & Bonds 13 First Invest FD for Income 14 Flag Inv Emerging Growth 15 Fortis Equity Capital 16 FPA Capital 17 Franklin STR GL UT 18 Gabelli Value Fund 19 IDS New Dimensions 20 John Hancock Growth & Income 21 Lord Abbett Dev Growth 22 Merrill Basic Value 23 MFS World Tot Return 24 New England Growth Opp 25 Oppenhmr Quest Small Cap 26 Phoenix Worldwide 27 Princor Bond 28 Stagecoach Disd Income 29 United Cont1 Income 30 Victory OH Regional 31 Zweig SR TR Apprec B Return 15.51 14.57 17.73 10.31 16.23 16.04 18.77 18.21 17.27 11.95 13.81 12.44 15.39 13.46 23.66 17.38 22.45 18.38 18.06 22.75 20.35 13.09 18.16 14.47 15.78 8.40 16.52 12.59 18.24 14.80 D Mutual Funds - No Load Amana Income Fund Berger One Hundred Columbia International Stock Dodge & Cox Balanced Evergreen Fund Fidelity Fund Forthis Advtg Cap App Founders Blue Chip Fund Goldman Core Fixed Income Heartland Value Janus Fund Manstay Cap Appriciation Merrill Spec Value Mutual Beacon Oberweis Emerging Growth Paine Webber Growth & Income Pimco Total Return Prudential Equity Putnam Growth & Income Royce FD Micro-Cap Scudder Development Smith Barney Appreciation Stein Roe Capital Oppty T Rowe Price Balanced Thompson Plumb Growth USAA Growth & Tax Strat Vanguard Equity Income Vanguard Windsor Vontobel Intl Equity Weith Value E Return 13.24 12.13 12.17 16.06 17.61 20.61 13.38 17.15 10.38 18.15 15.82 17.29 16.42 19.49 11.06 13.89 8.43 18.29 17.80 17.05 12.80 15.09 19.70 13.57 18.58 11.89 19.00 20.71 13.56 19.82 A 1 Mutual Funds - Load 2 American National Growth 3 Arch Small Cap Equity 4 Bartlett Cap Basic 5 Calvert World International 6 Colonial Fund A 7 Common Sense Growth 8 Corefund Core Equity 9 Davis Convert Seurities 10 Deleware Small Cap 11 Dreyfus Premium Value 12 Federated Stocks & Bonds 13 First Invest FD for Income 14 Flag Inv Emerging Growth 15 Fortis Equity Capital 16 FPA Capital 17 Franklin STR GL UT 18 Gabelli Value Fund 19 IDS New Dimensions 20 John Hancock Growth & Income 21 Lord Abbett Dev Growth 22 Merrill Basic Value 23 MFS World Tot Return 24 New England Growth Opp 25 Oppenhmr Quest Small Cap 26 Phoenix Worldwide 27 Princor Bond 28 Stagecoach Disd Income 29 United Cont1 Income 30 Victory OH Regional 31 Zweig SR TR Apprec B Return 15.51 14.57 17.73 10.31 16.23 16.04 18.77 18.21 17.27 11.95 13.81 12.44 15.39 13.46 23.66 17.38 22.45 18.38 18.06 22.75 20.35 13.09 18.16 14.47 15.78 8.40 16.52 12.59 18.24 14.80 D Mutual Funds - No Load Amana Income Fund Berger One Hundred Columbia International Stock Dodge & Cox Balanced Evergreen Fund Fidelity Fund Forthis Advtg Cap App Founders Blue Chip Fund Goldman Core Fixed Income Heartland Value Janus Fund Manstay Cap Appriciation Merrill Spec Value Mutual Beacon Oberweis Emerging Growth Paine Webber Growth & Income Pimco Total Return Prudential Equity Putnam Growth & Income Royce FD Micro-Cap Scudder Development Smith Barney Appreciation Stein Roe Capital Oppty T Rowe Price Balanced Thompson Plumb Growth USAA Growth & Tax Strat Vanguard Equity Income Vanguard Windsor Vontobel Intl Equity Weith Value E Return 13.24 12.13 12.17 16.06 17.61 20.61 13.38 17.15 10.38 18.15 15.82 17.29 16.42 19.49 11.06 13.89 8.43 18.29 17.80 17.05 12.80 15.09 19.70 13.57 18.58 11.89 19.00 20.71 13.56 19.82