Question

The Chartered Financial Analyst (CFA) designation is fast becoming a requirement for serious investment professionals. Although it requires a successful completion of three levels of grueling exams, it also entails promising careers with lucrative salaries. A student of finance is curious about the average salary of a CFA^® charterholder. He takes a random sample of 49 recent charterholders and computes a mean salary of $159,000 with a standard deviation of $42,000. Use this sample information to determine the 90% confidence interval for the average salary of a CFA charterholder. Assume that salaries are normally distributed.

Answer 1

Given that, sample size (n) = 49, sample mean = $159000

and sample standard deviation (s) = $42000

Degrees of freedom = 49 - 1 = 48

t-critical value at significance level of 0.10 with 48 degrees of freedom is,

Excel Command : =TINV(0.10, 48) = 1.6772

The 90% confidence interval for the average salary of a CFA charterholder is,

Therefore, required confidence interval is, ($148937, $169063).