Mutual funds
A mutual fund manager claims that at least 70% of the stocks she selects will increase in price over the next year. We examined a sample of 200 of her selections over the past three years. Our P-value turns out to be 0.03. Test an appropriate hypothesis. Which conclu- sion is appropriate? Explain.
a) There's a 3% chance that the fund manager is correct.
b) There's a 97% chance that the fund manager is correct.
c) There's a 3% chance that a random sample could produce the results we observed, so it's reasonable to conclude that the fund manager is correct.
d) There's a 3% chance that a random sample could produce the results we observed if p = .7, so it's reasonable to conclude that the fund manager is not correct.
e) There's a 3% chance that the null hypothesis is correct.