Question

Morningstar publishes ratings data on 1208 company stocks (Morningstar website, October 24, 2012). A sample of 40 of these stocks is contained in the WEBfile named Morningstar. Use the Morningstar data set to answer the following questions. A. Develop a point estimate of the proportion of the stocks that receive Morningstar’s highest rating of 5 Stars. b. Develop a point estimate of the proportion of the Morningstar stocks that are rated Above Average with respect to business risk. c. Develop a point estimate of the proportion of the Morningstar stocks that are rated 2 Stars or less.

Answer 1

Solution for A)A. Develop a point estimate of the proportion of the stocks that receive Morningstar’s highest rating of 5 Stars.

The data represents there are two company has Morningstar’s highest rating 5 among the 40 company for compute a point estimate of the proportion of the stocks that receieve Morningstar's highest rating of 5 stars is

p̂=X/N

= 5/40

0.12 A point estimate of proportion of the stocks that receives  Morningstar's highest rating of 5 is.

Solution: b) Develop a point estimate of the proportion of the Morningstar stocks that are rated Above Average with respect to business risk.

The Point estimate for Morningstar stocks that are rated above with respect to business risk are

p̂=X/N

= 6/40

= 0.15

Solution : C) Develop a point estimate of the proportion of the Morningstar stocks that are rated 2 Stars or less.

The Point estimate for Morningstar stocks that are rated 2 or less.

p̂=X/N

= 2/40

= 0.05