Explanation:
The standard error of the sample mean is calculated using the formula:
Where:
$3.2$ millionFirst, calculate the square root of the sample size:
Then calculate the standard error:
Convert to dollars:
0.533333 \text{ million} = \$533`,333$$
Why the other options are incorrect:
$88,889): This would be $3.2 \text{ million} ÷ 36$, which incorrectly divides by n instead of √n$400,000): This would be $3.2 \text{ million} ÷ 8$, which uses √64 instead of √36The correct answer is C. $533,333.
Ultimate access to all questions.
An analyst gathered the following information about a stock index:
| Mean net income for all companies in the index | $2.4 million |
|---|---|
| Standard deviation of net income for all companies in the index | $3.2 million |
If the analyst takes a sample of 36 companies from the index, the standard error of the sample mean is closest to:
A
$88,889
B
$400,000
C
$533,333
No comments yet.