Purchase Solution

Stock Market and confidence intervals

Not what you're looking for?

Currently the stock market is declining. A stock broker wishes to determine his portfolio. She randomly choose 64 daily stock prices for stock A from the past year data, and obtain the 95.44% confidence interval for the average price to be [ \$30.0 , \$40.0] A. What is the confidence coefficient? aa) 50% bb) .9544 cc) 40.00 dd) \$35.00 I believe it is bb, but correct me if I am wrong B. What is the average stock price of these 64 daily prices? aa) \$35.00 bb) \$30.00 cc) \$40.00 dd) 95.44% I believe it is \$35.00, because 30+40=70/2=35, correct me if I am wrong. C. Which test statistic is appied for this situation? aa) Z bb) t cc) None of the above. Not quite sure , but I think it is aa) Z, correct me if I am wrong. D. Which statemnt is correct: aa) This is a small sample bb) This is a large sample. cc) We should not invest in the stock market. dd) The current stock market for stock A is very good. I believe it is bb) large sample, because of the 64 stock prices, but correct me if i am wrong. E. What is an appropriate interpretation of the interval [430.0 , \$40.0]? aa) 95.44% sure each daily price is between \$30 and \$40. bb) 95.44% of daily stock prices fall into \$30 and \$40. cc) 95.44% sure the true average price of stock A in between \$30 and \$40. dd) 95.44% sure the sample average price of these 64 daily prices is between \$30 and \$40. Not sure, but if I had to guess, bb. F. If we decide to compute an 80% confidence interval for the average price of stock A using the same data, then, 80% confidence interval would be____ the 95.44% confidence interval: aa) narrower than. bb) wider than. cc) the same as.

Please show or explain how you derived at these solutions and add any comments that you think might help me to better understand.

Solution Summary

Currently the stock market is declining. A stock broker wishes to determine his portfolio. She randomly choose 64 daily stock prices for stock A from the past year data, and obtain the 95.44% confidence interval for the average price to be [ \$30.0 , \$40.0] A. What is the confidence coefficient? aa) 50% bb) .9544 cc) 40.00 dd) \$35.00 I believe it is bb, but correct me if I am wrong B. What is the average stock price of these 64 daily prices? aa) \$35.00 bb) \$30.00 cc) \$40.00 dd) 95.44% I believe it is \$35.00, because 30+40=70/2=35, correct me if I am wrong. C. Which test statistic is appied for this situation? aa) Z bb) t cc) None of the above. Not quite sure , but I think it is aa) Z, correct me if I am wrong. D. Which statemnt is correct: aa) This is a small sample bb) This is a large sample. cc) We should not invest in the stock market. dd) The current stock market for stock A is very good. I believe it is bb) large sample, because of the 64 stock prices, but correct me if i am wrong. E. What is an appropriate interpretation of the interval [430.0 , \$40.0]? aa) 95.44% sure each daily price is between \$30 and \$40. bb) 95.44% of daily stock prices fall into \$30 and \$40. cc) 95.44% sure the true average price of stock A in between \$30 and \$40. dd) 95.44% sure the sample average price of these 64 daily prices is between \$30 and \$40. Not sure, but if I had to guess, bb. F. If we decide to compute an 80% confidence interval for the average price of stock A using the same data, then, 80% confidence interval would be____ the 95.44% confidence interval: aa) narrower than. bb) wider than. cc) the same as.

Please show or explain how you derived at these solutions and add any comments that you think might help me to better understand.

Solution Preview

A).9544
<br>
<br>B)\$35 ( your thinking is correct.
<br>
<br>C)Z ( if the sample size ...

Solution provided by:
Education
• BE, Bangalore University, India
Recent Feedback
• "What does 1 and 0 means in the repair column?"
• "Went through all of the formulas, excellent work! This really helped me!"
• "try others as well please"
• "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."

Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.