Question

It is desired to estimate the average total compensation of CEOs in the service industry. Data were randomly collected from 18 CEOs and 95% confidence interval was calculated to be ($2,190,000, $4,720,000). Based on the interval above, do you believe the actual average total compensation of CEOs in the service industry could be $5,000,000

Answer 1

Option C

Explanation:

Remaining part of the question

a. Yes, and I am sure of that.

b. Yes, and I am 95% confident of that.

c. No, and I am sure of that.

d. No, and I am 95% confident of that.

Solution

The compensation in the range of 95 % is ($2,190,000, $4,720,000). This indicate that there are 95% chances that a given CEO compensation will fall with in the give range.

The given salary range is $5,000,000 which does not lie in the given range. Hence, it is in the region of the graph or bell curve where there are 5% chances that the given salary range will not fall into the given salary range i,e ($2,190,000, $4,720,000)

Hence, the actual average total compensation of CEOs in the service industry can or cannot be $5,000,000

Hence, option C is correct