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: 55 February: 58 March: 57 April: 50 May: 62 June: 59 Source: http://finance.yahoo.com.

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. For given sample mean is

Create the following table.

data	data-mean	(data - mean)2
55	-1.8333	3.36098889
58	1.1667	1.36118889
57	0.1667	0.02778889
50	-6.8333	46.69398889
62	5.1667	26.69478889
59	2.1667	4.69458889

b. t table value for 5 df for 99% CI is 4.030

So Margin of Error is

Hence CI is

c. The margin of error increases as the confidence level increases, because increasing CI will increase t value and so will increase Margin of Error