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An initial public offering (IPO) is the first sale of stock by a private company to the public. In a study of more than 4000
An initial public offering (IPO) is the first sale of stock by a private company to the public. In a study of more than 4000 IPOs, researchers found the average annual return over a five-year period for firms issuing an IPO was 5.1%. (source: Loughran, T., and J. R. Ritter. The New Issues Puzzle. Journal of Finance 50:23-51). If the distribution describing returns reported for all the various IPO firms in the study is normal, with a standard deviation of 2.2%, there is a 0.15 probability that one of the stocks had a five-year average annual return of less than %. Question 11 18 For its "Teenage Life Online" report, representatives of the Pew Internet and American Life Project conducted phone interviews with 342 randomly selected young people between the ages of 12 and 17 to learn about the Internet habits of US teenagers. If the survey reports that the average time spent online was 8.2 hours per week for the 342 participants in the sample, build a 90% confidence interval estimate of the average time spent online per week by the population of US teenagers repre- sented here. (Assume the standard deviation for the population of online times is known to be 5.6 hours.)
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