(*explaining how to do this, step by step; while how to compute this with a TI-8
ID: 3330806 • Letter: #
Question
(*explaining how to do this, step by step; while how to compute this with a TI-84, if possible/ applicable please)
You are tracking Chipotle Mexican Grill's stock price, attempting to figure out a good price point for entry into the market. You look at 43 random days over the course of a few months and see that the closing price has an average of $280.88 with a standard deviation of $22.892. You construct a 90% confidence interval for the average stock price to be (275.008, 286.752). Of the following choices, what is the approporiate interpretation of this interval?
Question 2 options:
1)
We are 90% confident the average daily closing price for the days monitored is between 275.008 and 286.752.
2)
We are 90% confident the average daily closing price for any day is between 275.008 and 286.752
3)
We are 90% confident that the proportion of all days that have a closing price between 275.008 and 286.752 is 90%
4)
We are certain that 90% of the daily closing prices will be between 275.008 and 286.752.
5)
We cannot determine the proper interpretation of this interval.
1)
We are 90% confident the average daily closing price for the days monitored is between 275.008 and 286.752.
2)
We are 90% confident the average daily closing price for any day is between 275.008 and 286.752
3)
We are 90% confident that the proportion of all days that have a closing price between 275.008 and 286.752 is 90%
4)
We are certain that 90% of the daily closing prices will be between 275.008 and 286.752.
5)
We cannot determine the proper interpretation of this interval.
Explanation / Answer
In a confidence interval the level of significance is our confidence level. Also we need to understand for what we are finding the confidence level for. Here it is for the average daily closing stock price.
Hence Option 2) is the correct answer. We are 90% confident the average daily closing price for any day is between 275.008 and 286.752
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