Question

The price of a share of stock divided by the company's estimated future earnings per share is called the P/E ratio. High P/E ratios usually indicate "growth" stocks, or maybe stocks that are simply overpriced. Low P/E ratios indicate "value" stocks or bargain stocks. A random sample of 51 of the largest companies in the United States gave the following P/E ratios†.

11	35	19	13	15	21	40	18	60	72	9	20
29	53	16	26	21	14	21	27	10	12	47	14
33	14	18	17	20	19	13	25	23	27	5	16
8	49	44	20	27	8	19	12	31	67	51	26
19	18	32

A(Find a 90% confidence interval for the P/E population mean μ of all large U.S. companies. (Round your answers to one decimal place.)

lower limit
upper limit

B.Find a 99% confidence interval for the P/E population mean μ of all large U.S. companies. (Round your answers to one decimal place.)

lower limit
upper limit

Answer 1

The statistical software output for this problem is:

Hence,

a) 90% confidence interval:

Lower limit = 21.5

Upper limit = 28.8

b) 99% confidence interval:

Lower limit = 19.4

Upper limit = 31.0