CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

If a random sample of size n = 100 from a population with s = 8 yields a sample mean of 56, then a 90% confidence interval for μ is ______.

A. -1.32 < μ < 1.32
B. 54.98 < μ < 57.02
C. 54.68 < μ < 57.32
Correct Answer: C

For a 90% confidence interval we find z(0.05), the cutoff for the top 5% of the normal distribution. Looking up 0.95 in the middle of the table, the reading to the row/column values, we get 1.645. Working with the formula for E, we get E = 1.32. So, the 90% confidence interval is 56 - 1.32 < m < 56 + 1.32 or 54.68 < μ < 57.32.

User Contributed Comments 4

User Comment
got2pass what is the formula for E?
Poorvi E = z x s/(n)^1/2
poomie83 What is the deal for the top 5% cut off. Where does that come from?
leftcoast The top 5% of the distribution is cut off if you want a 90% confidence interval. It's just talking about how to find the appropriate z-score. Easier to just memorize the 90% z-score.
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