The financial manager of a large department store selected a random sample of 200 of its credit card customers and found that 136 had incurred interest charges during the previous year because of an unpaid balance. a) Give the value of the point estimate for the true proportion of credit card customers who incurred an interest charge during the previous year. (1) b) Compute a 90% confidence interval for the true proportion of credit card customers who incurred an interest charge during the previous year and interpret your answer. (5) c) If the desired width of the 90% interval is 0.05, what sample size is necessary to ensure this? (4) d) Does the upper limit of the interval in part b) specify a 90% upper confidence bound for the proportion being estimated? Explain.
The financial manager of a large department store selected a random sample of 200 of its credit
card customers and found that 136 had incurred interest charges during the previous year
because of an unpaid balance.
a) Give the value of the point estimate for the true proportion of credit card customers who
incurred an interest charge during the previous year. (1)
b) Compute a 90% confidence interval for the true proportion of credit card customers who
incurred an interest charge during the previous year and interpret your answer. (5)
c) If the desired width of the 90% interval is 0.05, what
this? (4)
d) Does the upper limit of the interval in part b) specify a 90% upper confidence bound for the
proportion being estimated? Explain.
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