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 36 recent charterholders and computes a mean salary of $178,000 with a standard deviation of $44,000. Use this sample information to determine the 99% confidence interval for the average salary of a CFA charterholder. Assume that salaries are normally distributed. (You may find it useful to reference the t table. Round intermediate calculations to at least 4 decimal places. Round "t" value to 3 decimal places and final answers to the nearest whole number.)

Answer 1

Solution :

t _/2,df = 2.724

Margin of error = E = t_/2,df * (s /n)

= 2.724 * (44000 / 36)

Margin of error = E = 19976

The 99% confidence interval estimate of the population mean is,

- E < < + E

178000 - 19976 < < 178000 + 19976

158024 < < 197976

(158024 , 197976)