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The New York Stock Exchange (NYSE) consists of listing of approximately 1,500 companies, which offer shares of company stock to the public. Stockbrokers are interested not only in the individual stocks, but also in general trends established by the market as a whole. They often base inferences upon the daily closing prices of the group of 30 NYSE stocks that comprise the Dow Jones Industrial Index.

a. Identify the population, the variable of interest, and the sample in the context of this problem.
b. What are some inferences of possible interest to a stockbroker? How would the reliability of the inferences be assessed?

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Solution Summary

This solution provides some general information and the solution to the problem. Supplementary examples are also provided.

Solution Preview

Before we approach this problem, some general information about a statistic problem will be reviewed. Every statistical problem is composed of five elements: a population, a variable, a sample, an inference, and a measure of the reliability of the inference. It is the primary objective of statistics to use information available in a sample to make an inference (that is, a decision prediction, estimate, or generalization) about a population from which the sample was selected. With each inference is associated a measure of its reliability; each estimate or prediction will be accomplished by a bound on the ...

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