Largest private companies. IPOsinitial public offerings of stockcreate billions of dollars of new wealth for owners, managers,

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Largest private companies. IPOs—initial public offerings of stock—create billions of dollars of new wealth for owners, managers, and employees of companies that were previously privately owned. Nevertheless, hundreds of large and thousands of small companies remain privately owned. The revenues of a random sample of 15 firms from Forbes 228 Largest Private Companies list are given in the table (next page).

a. Describe the population from which the random sample was drawn.

b. Use a 98% confidence interval to estimate the mean revenue of the population of companies in question.

c. Interpret your confidence interval in the context of the problem.

d. What characteristic must the population possess to ensure the appropriateness of the estimation procedure used in part b?

e. Suppose Forbes reports that the true mean revenue of the 228 companies on the list is $5.0 billion. Is the claim believable?

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Statistics For Business And Economics

ISBN: 9781292413396

14th Global Edition

Authors: James McClave, P. Benson, Terry Sincich

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