Can someone help me? Let\'s look at Amazon again. It is the largest internet bas
ID: 3225745 • Letter: C
Question
Can someone help me?
Let's look at Amazon again. It is the largest internet based retailed in the US. It is also a publicly traded company. Investors might be interested in the performance of Amazon's stock from year to year to see how the performance changes. One metric of rating a stock may be it's average daily change in a year, i-e., the average amount that the closing price changed from one day to the next over a year. For the year 2015, the average closing price change over 136 days was +1.270 points for Amazon's stock price. Assume that the day-to-day price changes for 2015 follow a normal distribution with a standard deviation of sigma = 7.8 and assume that we can treat the days we have data for as a random sample Calculate a 90% confidence interval for the change in closing stock price for2015 Interpret this confidence interval. Say we wanted to make a 99% confidence interval that estimated the mean stock price within no more than 1.25 points. How many days would we need in our sample?Explanation / Answer
mean = 1.27
std. dev. = 7.8
n = 136
(A) For 90% CI, z-value = +/- 1.64
Confidence interval = mean +/- z*std.dev/sqrt(n)
= 1.27 +/- 1.64*7.8/sqrt(136) = 1.27 +/- 1.097
Confidence Interval = (0.1731, 2.3669)
(B)
The above confidence interval indicates that 90% of times a sample of 136 selected for stock price, mean change will lie within (0.1731, 2.3669)
(C)
here margin of error = 1.25
ME = z*sigma/sqrt(n)
n = (z*sigma/ME)^2
n = (2.58 * 7.8/1.25)^2
n = 259.184
Hence a sample of 259 is required