95% Confidence Interval

CFA Level I
#1

Hi everyone!

So I’m having problem with the following mock exam question. Which ‘‘p’’ are you supposed to use? 2.045 or 1.699? Is the question asking for one or two-tailed confidence interval? In my opinion, the confidence interval in calculated as 1.699* (0.12/30^0.5)= 0.0372, but in the answer sheet the answer is 2.045*0.12/(30^0.5).

ANyways, here’s the question:

In analyzing a set of 30 returns for a mutual fund manager with an average return of 6% and a standard deviation of observations of 12%, the estimated 95% confidence interval, using the table below, of the one-tailed probabilities Student’s t-distribution is closest to :

df p=0.025 p=0.05

28 2.048 1.701

29 2.045 1.699

30 2.042 1.697

#2

"Confidence Interval"

That’s the major hint. Remember that a CI is a range of values that, statistically speaking, the assessed variable is likely to be or fall. The CI is centered at the mean, so if your confidence level is 95%, you use an alpha of 5% and distribute 2.5% at each tail. You must use p=0.025