Given a mean of 10% and a standard deviation of 14%, what is a 95% confidence interval for the return next year?
-17.44% to 37.44%
-4.00% to 24.00%
-17.00% to 38.00%
solution:
10% +/- 14(1.96) = -17.44% to 37.44%.
the thing that I’m confused is, are we supposed to automatically use the standard deviation instead of the standard error where the size isn’t given?
the standard error usually the difference between population parameter and sample estimate… according to this question they are simply asking the confidence interval. as we know the the z value of 95% is 1.96 and when we multiply tht with standard deviation we will get 27.44 and then add and subtract tht with 10. standard error are basically used in hypothesis problem… i hope this helps
I guess it is safe to assume that if you are not given the size of a sample then you are dealing with the entire population. Plus, like you pointed out, you couldn’t calculate the standard error anyway.
@dazz: I think you’re thinking of the sample error, the standard error is standard deviation divided by the square root of the population size and sample error is population parameter minus the sample estimate. You use standard error when computing the confidence intervals and then multiply 1.96 + or - the mean. I could be wrong though. @valtinho: I think you’re right. . . slightly frustrating.
@Dazz: nvm… I think you’re right, now I"m just confused on when to use std and when to use standard error. a;lfkjowiegh;goijpi