In: Statistics and Probability
(78,75,83,81,81,77,78,79,79,81,76,79,77,76,79,81,73,74,78,79)
Answer:-
Given That:-
Along with interest rates, life expectancy is a component in pricing financial annuities. Suppose that you know that last year average life expectancy was 77 years for your annuity holders. Now you want to know if your clients this year have a longer life expectancy, on average, so you randomly sample n=20 of your recently deceased annuity holders to see actual age at death. Using a 5% level of significance, test whether or not the new data shows evidence of your annuity holders now live longer than 77 years, on average. The data below are the sample data
(78,75,83,81,81,77,78,79,79,81,76,79,77,76,79,81,73,74,78,79)
claim : The Average life expectancy increase number of sample
sample mean
Standard deviation
a)this sample indicate that life expectancy has increased
Null and Alternative Hypothesis :-
(i) Test statistics :-
(ii) P - value
Since P - value is less than SO, we reset the null hypothesis So there is sufficient to confidence conclude the Average life expectancy increase this year.
(b)Construct A 90% confidence interval for the true average age of death for the population of your annuity holders.
90% confidence interval :-
Since
CI =
we are 90% confident that the Average value lies in that range
yes, confidence interval agrees the decision.
c)Since and
Margin error =