If we expect that next month the T-bill rate will equal its average over the last 18 months, using Equation III, calculate the 95% confidence interval for the expected fund return. A. 0.296 to 0.538. B. 0.270 to 0.564. C. 0.259 to 0.598.
The forecast is 0.417 = 0.229 + 0.4887 × (0.384). The 95% confidence interval is Y ± (tc × sf) and tc for 16 degrees of freedom for a 2 tailed test = 2.120. The 95% confidence interval = 0.417 ± (2.120)(.0693) = 0.270 to 0.564
