# Average Return

### QUESTION 1

You are considering investing in a company. The company claims for the past few years the average monthly return on such an investment has been \$870 with a standard deviation of \$50. You sample 30 investors and determine the sample average return to be \$855. Using a .05 level of significance you will test to determine if there is evidence that the true average return is different from \$870. What is the value of your test statistic?

a. 30

b. -.308

c. 98

d. -1.64

QUESTION 2

You are considering investing in a company. The company claims for the past few years the average monthly return on such an investment has been \$870 with a standard deviation of \$50. You sample 30 investors and determine the sample average return to be \$855. Using a .05 level of significance you will test to determine if there is evidence that the true average return is different from \$870. If your test statistic is -1.64 what will be your decision?

a. Reject Ho

b. Reject H1

c. Do not reject H1

d. Do not reject Ho

QUESTION 3

You are considering investing in a company. The company claims for the past few years the average monthly return on such an investment has been \$870 with a standard deviation of \$50. You sample 30 investors and determine the sample average return to be \$855. Using a .05 level of significance you will test to determine if there is evidence that the true average return is different from \$870. What is your conclusion?

a. There is evidence of a difference in the average return.

b. There is no evidence of a difference in the average return

c. Indeterminate

d. Inconclusive

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