In: Statistics and Probability
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 45 recent charterholders and computes a mean salary of $155,000 with a standard deviation of $18,000. Use this sample information to determine the 95% confidence interval for the average salary of a CFA charterholder. Assume that salaries are normally distributed.
We have given that,
Sample mean =$155000
Sample standard deviation =$18000
Sample size =45
Level of significance=1-0.95=0.05
Degree of freedom =44
t critical value is (by using t table)=
2.015
Confidence interval formula is
=(149593.1876 , 160406.8124)
Lower confidence limit= $149593.19
Upper confidence limit=
$160406.81