MBA 5008 homework 6 Name: _________________________________________ Fall 2015 Directions: Answer all questions. The value of each question, and part thereof, is as given. Show all work and clearly indicate your answers. If you are unable to solve a portion of a problem and need that solution for subsequent sections of the problem, make a reasonable assumption regarding the answer that you need and clearly state the assumption that you are making. If you are using excel, 1. make sure that the formula you are using is entered into the cell where the solution is given. E.g., =average(location of data). 2. Use, and label, the tabs at the bottom of the spreadsheet indicating which problem is being done rather than submitting multiple excel files. 1. (20) Use the data from the stock that you chose for the first homework assignment to solve this problem. a. (10) Determine a 95% confidence interval for the true average stock price based on your data. Use your data!! For the two of you who did not submit the homework, use the Disney data provided here to calculate the confidence interval. Day Closing Price Day Closing Price b. 9/2 9/3 9/4 99.16 99.55 101.46 100.36 9/17 103.7 5 9/18 9/21 9/22 102.39 102.46 9/8 100.3 6 101.48 9/9 101.6 8 9/10 101.3 3 9/11 102.2 0 9/14 102.9 9 9/15 101.8 3 9/23 101.3 8 9/24 9/25 9/28 9/29 9/30 99.24 99.58 98.30 97.77 9/16 102.7 5 100.5 (10) The table below shows the 52 week high for the stock that you used in the first homework assignment. Test to determine if the average stock price differs from the 52 week high use = 0.05. Use your data!! For the two of you who did not submit the homework or if yours is not here, use the Disney data provided here to calculate the confidence interval. Avon 10.65 2. 9/1 Nordstro m 83.16 ISIS Pharm 62.54 J&J 109.49 Coca Cola 53.79 Kellogg 72.34 FedEx 168.33 Microsof t 54.98 Apple BBY Disney 134.54 42.00 122.08 (20) Physicians at the local hearing clinic are testing a new procedure that they hope will help people who experience hearing loss either due to work environment or due to age. Prior testing has shown that 80% of individuals who have had the procedure have experienced hearing improvement. a. b. (4) What is the probability that between 6 and 13 inclusive experience hearing improvement? c. (4) What is the probability that ten or more experience improvement in their hearing? d. (3) What is the probability that exactly eight experience improvement in their hearing? e. 3. (3) If fifteen individuals have the procedure, what is the probability that they all will experience hearing improvement? (6) If more people are told about the procedure and 75 people have the procedure, what is the expected number who will experience hearing improvement? What is the variance and standard deviation of the number of people who benefit? (15) The local housing authority is attempting to analyze the implications of the change from rentcontrolled housing to rent-stabilized housing. A total of 250,000 people live in rent-stabilized housing. The table below shows the percentages of individuals who live in each unit. Number of People in housing unit Percent of total 1 2 3 4 5 6 0.41 0.30 0.14 0.11 0.03 0.01 a. (7) What is the expected number of individuals in each unit? b. (8) What are the variance and standard deviation of the number of individuals in each unit? 4. (25) For borrowers with good credit scores, the mean debt for revolving and installment accounts is $15,015. If the standard deviation is $3540 and the debts are normally distributed: a. b. (3) What is the probability that the debt a borrower with good credit is less than $10,000? c. (4) What is the probability that the debt for a borrower with good credit is between $12,500 and $19,500? d. (3) What is the probability that the debt for a borrower with good credit is no more than $13,000? e. (4) If one hundred people with good credit scores are selected, what is the distribution of the credit scores? f. (4) What is the probability that the average of the one hundred selected individuals is more than 14,500? g. 5. (3) What is the probability that the debt a borrower with good credit is more than $22,000? (4) What is the probability that the average of the one hundred selected individuals is more than 15,800? (5) The following table provides information on people's reactions to the service and quality of food that they experienced at Emirl Lagasse's restaurant in New Orleans. They rated the service as Poor (P), Fair (F), Good (G), Very Good (VG) or excellent (E). P VG F E E G G VG E E VG F E E VG E VG E E G G VG VG E E G E P G F G VG VG VG VG E VG E E VG Show the frequency and relative frequency distributions for these data. 6. (15) The cost of automobile accidents has been estimated to be $162 billion annually. The average cost per person for crashes in Charlotte, NC are reported to be $1650. Suppose that this average is based on a sample of 50 individuals. It is also known that the variance of the cost of an accident is 360,000. a. What is the margin of error for a 99% confidence interval for the true cost of automobile accidents ? b. Construct the confidence interval. c. What would you recommend if the study required a margin of error of $150 or less