How Many Observations Would Be Necessary for a Time Studies

question 94

Essay

How many observations would be necessary for a time studies analyst to be 99% confident that the average time is within ± .3 minutes of the true value, if the average time is 10.5 minutes and the standard deviation is 3 minutes?

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Definitions:

Price Risk

The risk that the price of a financial asset will fluctuate, affecting the profit or loss of an investment.

Reinvestment Risk

The risk that future proceeds will have to be reinvested at a lower potential interest rate.

Interest Rate Risk

The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, or in any other interest rate measure.

Duration Of Assets

The sensitivity of an asset's price to interest rate changes, expressed in years.