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We are studying mutual bond funds for the purpose of investing in
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 We are studying mutual bond funds for the purpose of investing in several funds. For this particular study, we want to focus on the assets of a fund and its five-year performance. The question is: Can the five-year rate of return be estimated based on the assets of the fund? Nine mutual funds were selected at random, and their assets and rates of return are shown below.

 Assets Return Assets Return Fund (\$ millions) (%) Fund (\$ millions) (%) AARP High Quality Bond \$622.2 10.8 MFS Bond A \$494.5 11.6 Babson Bond L 160.4 11.3 Nichols Income 158.3 9.5 Compass Capital Fixed Income 275.7 11.4 T. Rowe Price Short-term 681.0 8.2 Galaxy Bond Retail 433.2 9.1 Thompson Income B 241.3 6.8 Keystone Custodian B-1 437.9 9.2

 b-1. Compute the coefficient of correlation. (Round your answer to 3 decimal places. Negative amount should be indicated by a minus sign.) r  =  0.002

 b-2. Compute the coefficient of determination. (Round your answer to 3 decimal places.) r2 =

 c. Give a description of the degree of association between the variables. There is (Click to select)very littlea very stronga strong association between the variables.

 d. Determine the regression equation. Use assets as the independent variable. (Round your answers to 4 decimal places. Negative amounts should be indicated by a minus sign.) b = a =

 e. For a fund with \$400.0 million in sales, determine the five-year rate of return (in percent). (Round your answer to 4 decimal places.)

 =  The equation should be used with caution. Assets do not account for much of the variation in the rate of return.

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This question was answered on: Feb 21, 2020

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