Question

Thirteen analysts have given the following fiscal-year earnings forecasts for a stock:

Forecast (Xi) Number of Analysts (ni)

0.70 2

0.72 4

0.74 1

0.75 3

0.76   1

0.77 1

0.82 1

Because the sample is a small fraction of the number of analysts who follow this stock, assume that we can ignore the finite population correction factor.

1. What are the mean forecast and standard deviation of forecasts?

2. What aspect of the data makes us uncomfortable about using t-tables to construct confidence intervals for the population mean forecast?

Answer 1

For last question answer is below and in the spreadsheet also:

It is having two peaks at 0.77 and 0.82 which means that data is not normally distributed, Hence we cannot compute the confidence intervals.

A little add up to last answer.

It is having two peaks at 0.77 and 0.82 which means that data is not normally distributed, Hence we cannot compute the confidence intervals. A normal distribution will have only one peak so that we get normal distribution. if it is having two peaks meas data is spread wide lying outside of the mean showing with less normality. Hence, we cannot be able to construct the confidence intervals.