Question

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 36 recent charterholders and computes a mean salary of $162,000 with a standard deviation of $36,000. Use this sample information to determine the upper bound of the 90% confidence interval for the average salary of a CFA® charterholder. (Round the "t" value to 3 decimal places.)

Answer 1

Given that,

= $162000

s =$36000

n =36

Degrees of freedom = df = n - 1 = 36- 1 = 35

At 90% confidence level the t is ,

= 1 - 90% = 1 - 0.90 = 0.1

/ 2 = 0.1 / 2 = 0.05

t _/2,df = t_0.05,35 =1.690

Margin of error = E = t_/2,df * (s /n)

=1.690 * (36000 / 36) = 10140

The 90% confidence interval estimate of the population mean is,

- E < < + E

162000 - 10140 < <162000 + 10140

151860 < < 172140

( 151860 ,172140 )