[Solution Library] Mutual funds provide the individual investor with a convenient medium for diversification. A mutual fund spreads its investment over numerous

Question:

Mutual funds provide the individual investor with a convenient medium for diversification. A mutual fund spreads its investment over numerous securities, so that individuals who purchase a share in a mutual fund are investing in a highly diversified portfolio, something they could not achieve on their own with limited funds. Mutual funds tailor their diversification strategies to different investor groups. There are capital-growth funds, current income funds, equity funds, bond funds and so on. The table below lists the level of return over five years for a sample of investors for various categories of mutual funds.

	Level of Return
Mutual Fund Type	High Return	Medium Return	Low Return
Maximum capital gain	25	41	52
Long-term growth	22	31	42
Growth and current income	33	41	53
Balanced income	35	39	42
Common stock	28	15	10

Determine at a = 0.05 if there is evidence of a significant relationship between the level of return and the type of mutual fund.
What does this finding say about mutual fund investment?

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[Solution Library] Mutual funds provide the individual investor with a convenient medium for diversification. A mutual fund spreads its investment over numerous

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