Situation Z: The following sample of seven randomly selected stock prices were observed for a large corporation. Assume the population is normally distributed

31, 35, 19, 20, 23, 27, 25

For situation Z, what is the value of the margin of error for a 95% confidence interval estimate of the average stock price?

A. 2.65

B. 1.96

C.5.36

D.25.7

E. 25

Solutions

Expert Solution

For the given sample

n=7

sample standard deviation=5.794086

alpha=0.05

alpha/2=0.025

df=n-1=7-1=6

t critical value in excel

==T.INV(0.025,6)

=2.446911851

margin of error

=t*s/sqrt(n)

=(2.446911851*5.794086)/sqrt(7)

=5.358636

margin of error=5.36

OPTION C

orchestra answered 2 years ago

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