The issues surrounding th e levels and structure of executive com pensation have gained added prom inence in th e wake of th e financial crisis th a t erupted in th e fall of 2008. Based on the 2006 com pensation data obtained from the Securities and Exchange C om m ittee (SEC) website, it was determ ined th at th e m ean and th e standard deviation of com pensation for th e 500 highest paid CEOs in publicly trad ed U.S. com panies is $10.32 million and $9.78 million, respectively. An analyst random ly chooses 32 CEO com pensations for 2006.

a. Is it necessary to apply th e finite population correction factor? Explain.

b. Is th e sam pling distribution of th e sam ple m ean normally distributed? Explain.

c. Calculate th e expected value and th e standard deviation of th e sam ple m ean.

d. W hat is th e probability th a t th e sam ple m ean is m ore than $12 million? L056