Before Any Order Is Shipped, Inspectors at Alvarez Manufacturing Test

question 134

Multiple Choice

Before any order is shipped, inspectors at Alvarez Manufacturing test a sample of finished units for breaking strength.You select a simple random sample of units from a recently completed order and find that the sample average breaking strength is 814 pounds.From the sample selected, you construct a 95% confidence interval estimate of the average breaking strength you could expect to find if all the units in the order were tested.The interval turns out to be 814 ± 7.5 lbs.How would you interpret your result?

• A)Approximately 95% of the units in the order will have a breaking strength of between 806.5 lbs.and 821.5 lbs.
• B)Approximately 95% of the units in the sample have a breaking strength of between 806.5 lbs.and 821.5 lbs.
• C)Approximately 95% of the units in the population will have a breaking strength of between 806.5 and 821.5 lbs.
• D)We can be 95% confident that all the units in the order have a breaking strength of between 806.5 lbs.and 821.5 lbs.
• E)If we were to repeat this estimating procedure a large number of times, approximately 95% of the intervals we construct would contain the actual order average breaking strength.

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Definitions:

Initial Public Offering

The first time that the stock of a private company is offered to the public.

Venture Capitalist

An investor who provides capital to start-ups or small companies with high growth potential in exchange for equity stakes.

Leveraged Buyout

A financial transaction in which a company is purchased primarily with borrowed funds, often by taking on significant debt.

Venture Capitalist

An investor who provides capital to startup companies or supports small companies that wish to expand but do not have access to equities markets.