We are studying mutual bond funds for the purpose of investingin several funds. For this particular study, we want to focus onthe assets of a fund and its five-year performance. The question is:Can the five-year rate of return be estimated based on the assetsof the fund? Nine mutual funds were selected at random, and theirassets and rates of return are shown below.
Assets Return Assets Return
Fund ($ millions) (%) Fund ($ millions) (%)
AARP High QualityBond $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 FixedIncome 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 CustodianB-1 437.9 9.2
Compute the coefficient of correlation. (Round your answer to 3 decimalplaces.)
Compute the coefficient of determination. (Round your answer to 3 decimalplaces.)
Give a description of the degree of association between thevariables.
Determine the regression equation. Use assets as theindependent variable. (Roundyour answers to 3 decimal places.)
For a fund with $400.0 million in sales, determine thefive-year rate of return (in percent). (Round your answer to 3 decimalplaces.)
a.
r =
b. r2 =
c. There is (Click for List)very littlea very stronga strongno association between the variables.
d.
a =
b = .000
e. Y' = The equation should be used withcaution. Assets do not account for much of the variation in therate of return.