Question

The monthly closing stock prices (rounded to the nearest dollar) for Panera Bread Co. for the first six months of 2010 are reported in the following table. [You may find it useful to reference the t table.]
  

Months	Closing Stock Price
January	32
February	35
March	39
April	36
May	34
June	31

  

a. Calculate the sample mean and the sample standard deviation. (Round intermediate calculations to at least 4 decimal places and "Sample mean" and "Sample standard deviation" to 2 decimal places.)

b. Calculate the 99% confidence interval for the mean stock price of Panera Bread Co., assuming that the stock price is normally distributed. (Round "t" value to 3 decimal places and final answers to 2 decimal places.)   

c. What happens to the margin of error if a higher confidence level is used for the interval estimate?

• The margin of error increases as the confidence level increases.

• The margin of error decreases as the confidence level increases.

  

Answer 1

a)

sample mean =34.50

sample standard deviation =2.88

b)

std error sx=s/√n=

1.1762

for 99% CI; and 5 df, critical t=		4.0320
margin of error E=t*std error                            =		4.74
lower bound=sample mean-E =		29.76
Upper bound=sample mean+E=		39.24
from above 99% confidence interval for population mean =(29.76 , 39.24)

c)

The margin of error increases as the confidence level increases