It is desired to estimate the mean total compensation of CEOs in the Service ind

Question

It is desired to estimate the mean total compensation of CEOs in the Service industry. Data were randomly collected from 18 CEOs and the 95% confidence interval was calculated to be ($2,181,260, $5,836,180). Which of the following interpretations is correct? a. 95% of the sampled total compensation values fell between $2.181.260 and $5,836,180. a. We are 95% confident that the mean total compensation of all CEOs in the Service industry falls in the interval $2,181,260 to $5,836,180. a. In the population of Service industry CEOs, 95% of them will have total compensations that fall in the interval $2,181,260 to $5,836,180. a. We are 95% confident that the mean of the sampled CEOs falls in the interval $2,181,260 to $5.836,180.

Explanation / Answer

Given that the 95% confidence interval was calculated to be ($2,181,260,$5,836,180).

A confidence interval gives a range in which the unknown population parameter is likely to be included. So the 95% confidence interval gives a range for which we are 95% confident that it will contain the population mean.

So the required answer is " we are 95% confident that the mean of the total compensation of all CEOs in the service industry falls in the interval $2,181,360 and $5,836,180."

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