An article in Fortune magazine reported on the rapidrise of fees and expenses charged by mutual funds. Assuming thatstock fund expenses and municipal bond fund expenses are eachapproximately normally distributed, suppose a random sample of 12stock funds gives a mean annual expense of 1.50 percent with astandard deviation of 0.38 percent, and an independent randomsample of 12 municipal bond funds gives a mean annual expense of0.73 percent with a standard deviation of 0.40 percent. Letµ1 be the mean annual expense for stock funds,and let µ2 be the mean annual expense formunicipal bond funds. Do parts a, b, and c by using the equalvariances procedure.
(a) Set up the null and alternative hypothesesneeded to attempt to establish that the mean annual expense forstock funds is larger than the mean annual expense for municipalbond funds. Test these hypotheses at the 0.05 level ofsignificance. (Round yoursp2 answer to 4 decimal places andt-value to 2 decimal places.)
(b) Set up the null and alternative hypothesesneeded to attempt to establish that the mean annual expense forstock funds exceeds the mean annual expense for municipal bondfunds by more than 0.5 percent. Test these hypotheses at the 0.05level of significance. (Round your t-value to 2 decimalplaces and other answers to 1 decimalplace.)
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(c) Calculate a 95 percent confidence intervalfor the difference between the mean annual expenses for stock fundsand municipal bond funds. Can we be 95 percent confident that themean annual expense for stock funds exceeds that for municipal bondfunds by more than .5 percent? (Round your answers to 3decimal places.)
rev: 04_03_2020_QC_CS-206802
