A random sample of a certain category of stocks had the following annual returns
ID: 3386017 • Letter: A
Question
A random sample of a certain category of stocks had the following annual returns (%) last year. Use the data to construct a 99% confidence interval for the mean annual return last year for all stocks in this category.
6.4
10.5
7.6
5.8
12.6
9.3
14.2
11.2
(6.01,13.39)
The average return for 500 of the largest U.S. companies in the Standard and Poor's 500 index (S&P500) last year was 11.4%
Can we say with 99% confidence that the average return for all stocks last year in this particular category differed from the S&P500 last year? Why or why not?
Explanation / Answer
NO, because as we can see, 11.4 is inside the interval (6.03, 13.39).
Thus, we cannot conclude that that the average return for all stocks last year in this particular category differed from the S&P500 last year. [ANSWER]
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