Question

Investment firm claims that the mean increase in price per share companies invest in is $1.95 per share every year and national sample of 100 company shows that the mean increase in price per share is $1.82 per year the standard deviation of share price is nationally is $.30 what is the margin of error

Answer 1

The Margin of Error in percentage is 5.88%

Explanation:

The values of the factors in the question are;

The mean increase in price per share, = $1.95

The number of companies in the sample, n = 100

The mean increase in price per share,
`\overline x` = $1.82

The standard deviation of the population, σ = $0.30

The margin of error, MOE, is given by the following formula;

`Margin \ of \ Error= z * (\sigma)/(√(n) )`

Where;

z = z-score, critical value = 1.96 at 95%

σ = The standard deviation of the population = $0.30

n = The sample size = 100

Therefore, we have;

`Margin \ of \ Error= 1.96 * (0.3)/(√(100) ) = 0.0588`

The Margin of Error in percentage = 0.0588 × 100 = 58.8%

The Margin of Error in percentage = 5.88%