An analyst takes a random sample of 25 firms in the telecommunications industry and constructs a confidence interval for the mean return for the prior year. Holding all else constant, if he increased the sample size to 30 firms, how are the standard error of the mean and the width of the confidence interval affected? A B с D Standard error of the mean Increases Increases Decreases Decreases Multiple Choice Width of confidence interval Becomes wider Becomes narrower Becomes wider Becomes narrower

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An analyst takes a random sample of 25 firms in the telecommunications industry and constructs a confidence interval for the mean return for the prior year. Holding all else constant, if he increased the sample size to 30 firms, how are the standard error of the mean and the width of the confidence interval affected?

An analyst takes a random sample of 25 firms in the telecommunications industry and constructs a confidence interval for the mean return for the prior year. Holding all else constant, if he increased the sample size to 30 firms, how are the standard error of the mean and the width of the confidence interval affected?

| Standard error of the mean | Width of confidence interval |
|----------------------------|-----------------------------|
| A                          | Increases                   | Becomes wider             |
| B                          | Increases                   | Becomes narrower          |
| C                          | Decreases                   | Becomes wider             |
| D                          | Decreases                   | Becomes narrower          |

**Multiple Choice**

- C
- B
- A

**Explanation of Table**:

- **Standard error of the mean**: Refers to how much the sample mean estimate is expected to vary from the true population mean. Increasing the sample size generally decreases the standard error.
  
- **Width of confidence interval**: Refers to the range of values within which we expect the true population parameter to lie. A larger sample size usually results in a narrower confidence interval.
Transcribed Image Text:An analyst takes a random sample of 25 firms in the telecommunications industry and constructs a confidence interval for the mean return for the prior year. Holding all else constant, if he increased the sample size to 30 firms, how are the standard error of the mean and the width of the confidence interval affected? | Standard error of the mean | Width of confidence interval | |----------------------------|-----------------------------| | A | Increases | Becomes wider | | B | Increases | Becomes narrower | | C | Decreases | Becomes wider | | D | Decreases | Becomes narrower | **Multiple Choice** - C - B - A **Explanation of Table**: - **Standard error of the mean**: Refers to how much the sample mean estimate is expected to vary from the true population mean. Increasing the sample size generally decreases the standard error. - **Width of confidence interval**: Refers to the range of values within which we expect the true population parameter to lie. A larger sample size usually results in a narrower confidence interval.
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