During this year’s COVID-19 outbreak the stock prices for the airline companies went down by huge...

During this year’s COVID-19 outbreak the stock prices for the airline companies went down by huge margins. A day trader wants to invest in Airline stock and wants to learn how much interest is there in United Airlines. He wants to collect a random sample of investors.

The day trader wants to estimate the actual proportion of investors who would buy shares in United Airlines.

To calculate the required sample size, what value of p*p* should we use in the formula below to calculate a 90% confidence interval within 2.54 percentage points? Give exact answer as a decimal.

Expert Solution

Solution,

Given that,

= 1 - = 0.5 ( no prior estimate )

margin of error = E = 0.0254

At 90% confidence level

= 1 - 90%

= 1 - 0.90 =0.10

/2 = 0.05

Z/2 = Z0.05 = 1.645

sample size = n = (Z / 2 / E )2 * * (1 - )

= (1.645 / 0.0254)2 * 0.5 * 0.5

= 1048.58

sample size = n = 1049

orchestra answered 2 years ago

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