1
The Chartered Financial Analyst (CFA®) designation is fast becoming a requirement for serious investment professionals. Although it requires a successful completion of three levels of grueling exams, it also entails promising careers with lucrative salaries. A student of finance is curious about the average salary of a CFA®charterholder. He takes a random sample of 36 recent charterholders and computes a mean salary of $158,000 with a standard deviation of $36,000. Use this sample information to determine the 95% confidence interval of the average salary of a CFA® charterholder. Use Table 2. (Round your intermediate calculations to 4 decimal places, "t" value to 3 decimal places, and final answers to a whole number.)Confidence interval to
2
Executive compensation has risen dramatically beyond the rising levels of an average worker’s wage over the years. Sarah is an MBA student who decides to use her statistical skills to estimate the mean CEO compensation in 2010 for all large companies in the United States. She takes a random sample of six CEO compensations. Use Table 2.
Firm Compensation
(in $ millions)
Intel 8.20
Coca-Cola 2.76
Wells Fargo 6.57
Caterpillar 3.88
McDonald’s 6.56
U.S. Bancorp 4.10
SOURCE: http://finance.yahoo.com.
a. How will Sarah use the above information to provide a 90% confidence interval of the mean CEO compensation of all large companies in the United States? (Round your intermediate calculations to 4 decimal places, "sample mean" and "sample standard deviation" to 2 decimal places and "t" value to 3 decimal places, and final answers to 2 decimal places.)
Confidence interval $ to $ millions
b. What assumption did Sarah make for deriving the interval estimate?
Assume that the central limit theorem applies.
Assume that the population has a normal distribution.
c. How can Sarah reduce the margin of error reported in the above interval estimate?
Decrease her sample size, n.
Increase her sample size, n.
3
The manager of The Cheesecake Factory in Boston reports that on six randomly selected weekdays, the number of customers served was 120, 130, 90, 205, 185, and 220. She believes that the number of customers served on weekdays follows a normal distribution. Construct a 90% confidence interval of the average number of customers served on weekdays. Use Table 2. (Round your intermediate calculations to 4 decimal places, "sample mean" and "sample standard deviation" to 2 decimal places and "t" value to 3 decimal places, and final answers to 2 decimal places.)
Confidence interval to
