A Random Sample of 20 Observations Taken from a Normally

question 38

Multiple Choice

A random sample of 20 observations taken from a normally distributed population revealed a sample mean of 65 and a sample variance of 16. The lower limit of a 90% confidence interval for the population mean would equal:

• A) 66.546.
• B) 63.454.
• C) 63.812.
• D) 66.188.

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Definitions:

Risk Premium

The extra return demanded by investors for taking on additional risk above the risk-free rate of return.

Asset Return

The income that an asset produces for its investor, measured as a percentage of the asset's purchase price.

Risk-free Rate

A theoretical return on an investment with zero risk, typically represented by treasury bills or government bonds.

Risk Premium

The extra return above the risk-free rate that investors demand to compensate for the additional risk of holding a risky asset.