Single Mean Hypothesis Test As a finance student, you have learned the importance of investing early. Your financial advisor presents you with a Fidelity fund (FBGRX) which is a blue-chip growth fund that seeks to earn capital appreciation from large-cap, well-known companies. The Financial advisor says the model predicts that FBGRX will have a 20% annual return. Though you know that investing in the stock market is risky, and that past return does not predict future return, you decide to look at their track record. You found that the average annual return is 17.91% and the standard deviation is 17.21%, is the model correct? You want to be a 95% confident of your results. Also find confidence interval estimation. 1. Formulate hypothesis. 2. Collect the appropriate data to test hypothesis 3. Identify test statistics 4. Define critical value (rejection region) 5. Compute test statistics or p-value 6. Making the statistical decision.

Single Mean Hypothesis Test - As a finance student, you have learned the importance of investing early. Your financial advisor presents you with a Fidelity fund (FBGRX) which is a blue-chip growth fund that seeks to earn capital appreciation from large-cap, well-known companies. The Financial advisor says the model predicts that FBGRX will have a 20% annual return. Though you know that investing in the stock market is risky, and that past return does not predict future return, you decide to look at their track record. You found that the average annual return is 17.91% and the standard deviation is 17.21%, is the model correct? You want to be a 95% confident of your results. - Also find confidence interval estimation. 1. Formulate hypothesis. 2. Collect the appropriate data to test hypothesis 3. Identify test statistics 4. Define critical value (rejection region) 5. Compute test statistics or p-value 6. Making the statistical decision. - We almost never know the variance of the underlying population, - and in such cases, tests of a single mean are either t-tests or z-tests. - Tests comparing a single mean with a value: - Use a t-test with df=n1 when - Population variance is unknown and Sample is large or sample is small but (approximately) normally distributed. tn1=sXRP0 Student's T-Distribution