
Answer-first summary for fast verification
Answer: $[-0.17\%, \infty)$
## Explanation For a one-sided hypothesis test with the alternative hypothesis H₁: μ > μ₀ (where μ₀ = 0%), we need to construct a one-sided confidence interval. **Given parameters:** - Sample mean (μ) = 1.2% - Standard deviation (σ) = 0.05 - Sample size (n) = 36 - Significance level (α) = 5% - Critical value (Z_α) = 1.645 (for one-tailed test at 5% significance level) **Calculation:** The confidence interval for H₁: μ > μ₀ is constructed as: \[ [\mu - (Z_\alpha) \times (\sigma/\sqrt{n}), \infty) \] \[ = [1.2\% - (1.645) \times (0.05/\sqrt{36}), \infty) \] \[ = [1.2\% - (1.645) \times (0.05/6), \infty) \] \[ = [1.2\% - (1.645) \times 0.00833, \infty) \] \[ = [1.2\% - 0.0137, \infty) \] \[ = [-0.17\%, \infty) \] **Why other options are incorrect:** - **A**: This is for the alternative hypothesis H₁: μ < μ₀ - **C**: This represents a two-sided confidence interval, not appropriate for a one-sided test - **D**: This interval is not used in any standard hypothesis test formulation The decision rule is: if the hypothesized value (0%) falls within this confidence interval, we fail to reject the null hypothesis; if it falls outside, we reject the null hypothesis in favor of the alternative.
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A junior risk analyst at an asset management firm is monitoring the performance of a recently launched mutual fund against a benchmark index. The analyst uses the last 36 months of excess returns data to construct a confidence interval that can be used to test the one-sided hypothesis that the average excess monthly return of the mutual fund is greater than 0%. Information about the hypothesis test is given below:
Which of the following provides the correct confidence interval to be used as the decision criterion for the hypothesis test?
A
B
C
D
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