You have just received an inheritance of $10,000 and you decide that you should invest the money rather than
blow it on frivolous items. You have decided that you will invest the money in one of two types of mutual funds.
The first type that you are considering follows a large-value approach to investing. This means that the mutual
fund invests only in large, established companies that are considered to be a good bargain. The second type
following a large-growth approach to investing. This means that the mutual fund invests in large companies
that are experiencing solid revenue growth. To make an informed decision, you decide to reach the rate of
return for the past 3 years for each type of mutual fund. The mutual fund must have a Morningstar rating of four
or five stars.
The Morningstar mutual-fund rating system ranks mutual funds, using one to five stars. The stars divide the
mutual-fund performances into quintiles: that is, a mutual fund with a one-star rating is in the bottom 20% of
mutual funds in its category, a mutual fund with two-stars is in between the 21st and 40th percentile, and so on.
These data can be found at www.morningstar.com or screen.yahoo.com/funds.html
- Obtain a random sample of at least 15 mutual funds from each investment category. Determine the 3 years
rate of return for each fund. 2. Obtain a 95% confidence interval for the difference between the mean rates of
return. Interpret the interval.
You are going to write a report detailing which investment category seems superior. • The report contains 4-5
paragraphs in Microsoft Word (.doc or .docx) format with supporting data supporting your conclusion. • Attach
the Excel sheet used for the primary data source. •