Executive compensation has risen dramatically beyond the rising levels of an average worker's w age over the years.

Sarah is an MBA student who decides to use her statistical skills to estimate the mean CEO compensation in 2010 for all large companies in the United States. She takes a random sample of six CEO compensations.

Firm Compensation

(in $ millions)

Intel 8.20 Coca-Cola 2.76 Wells Fargo 6.57 Caterpillar 3.88 McDonald's 6.56 U.S. Bancorp 4.10 Source: http://finance.yahoo.com.

a. How will Sarah use the above information to provide a 90% confidence interval of the mean CEO compensation of all large companies in the United States?

b. What assumption did Sarah make for deriving the interval estimate?

c. How can Sarah reduce the margin of error reported in the above interval estimate? P-69