A stocks historical dividend yield is normally distrubued, with mean of 8 and alpha of 3.25. wha is the 95% confidence interval for dividend yield ?
a) 1.63 - 14.37
b) 0.58 - 12.33
c) 2.64 - 13.36
d)3.39 - 14.11
Are you sure that it’s alpha (α) and not sigma (σ)?
Assuming that it’s σ = 3.25, then the critical z-value (for 95%, two-tailed) is 1.96, so the confidence interval is:
(8 – 1.96 × 3.25, 8 + 1.96 ×3.25)
(1.63, 14.37)
Yes… It should be Sigma.
I got this question in a mock test. I am also thinking it should be Sigma instead of alpha.