Q1) We are studying mutual funds for purpose of investing in several funds. For this particular study, we want to focus on assets of fund and its 5-years performance.
Question is: Can five-year rate of return be evaluated based on assets of fund? Nine funds were selected at random, and their assets and rates of return are shown below.
|
Fund
|
Assets ($ Million)
|
Return(%)
|
Fund
|
Assets ($ Million)
|
Return(%)
|
|
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
|
|
|
|
i) Sketch a scatter diagram.
ii) Compute coefficient of correlation.
iii) Compute coefficient of determination.
iv) Write a brief report of your findings for parts b and c.
v) Determine regression equation. Use assets as independent variables.
vi) For fund with $400.0 million in sales, determineut five-year rate of return (in percent).