Question

18. FILE 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, Fund Return (%) Return Fund AARP High Quality Bond Babson Bond L Compass Capital Fixed Income Galaxy Bond Retail Keystone Custodian B-1 11.6 Assets ($ millions) $622.2 160.4 275.7 4332 437.9 Assets ($ millions) $494.5 158.3 6810 241.3 10.8 11.3 11.4 9.1 9.2 MFS Bond A Nichols Income T. Rowe Price Short-term Thompson Income B 9.5 8.2 6.8 CORRELATION AND LINEAR REGRESSION 459 a. Draw a scatter diagram. b. Compute the correlation coefficient c. Write a brief report of your findings for parts (a) and (b). d. Determine the regression equation. Use assets as the independent variable e. For a fund with $400.0 million in sales, determine the five-year rate of return (in percent),​

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Answer:

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