Youareaninvestmentanalyst,andyourtaskistoassesstherelationshipbetween risk and yields for various investment funds. You have compileddataonreturnsand riskinessof30largeinvestmentfunds,using5-yearaveragesforreturns(afterfees)andrisk(measuredbystandarddeviationsofthereturns).

InvestmentFund	Return (5-year average)	St.Dev (5-year average)
1	0.31%	5.93%
2	0.52%	4.97%
3	1.94%	3.13%
4	0.84%	3.22%
5	1.19%	5.78%
6	0.98%	8.29%
7	2.36%	11.82%
8	2.09%	11.06%
9	2.60%	12.05%
10	2.87%	11.23%
11	2.50%	12.69%
12	2.99%	15.67%
13	3.16%	12.81%
14	3.58%	17.34%
15	3.55%	17.72%
16	3.05%	16.41%
17	3.02%	18.69%
18	4.24%	18.95%
19	2.87%	21.29%
20	4.99%	17.14%
21	5.28%	21.29%
22	4.71%	23.33%
23	5.87%	24.42%
24	5.33%	23.98%
25	5.21%	26.29%
26	6.55%	23.86%
27	5.66%	23.33%
28	6.48%	25.33%
29	5.76%	25.76%
30	6.96%	28.10%

1. Compute the leastsquaresregression equation,usingreturn as thedependentvariableandstandarddeviationastheindependentvariable.Interprettheresults.(LO1and4;5marks)

1. Usethe95%confidenceleveltoshowwhereweshouldexpecttherelationshiptostandatthislevelofcertainty.(LO1and4;5marks)
2. Which fund did the best compared with the expected (predicted)result?Which one did the worst?Use residuals of the regression in youranswer.(LO1and4;5 marks)