In Order to Set Rates, an Insurance Company Is Trying

question 84

Multiple Choice

In order to set rates, an insurance company is trying to estimate the number of sick days that full time workers at an auto repair shop take per year. A previous study indicated that the standard deviation was 2.8 days. How
Large a sample must be selected if the company wants to be 95% confident that the true mean differs from the
Sample mean by no more than 1 day?

• A)31
• B)141
• C)512
• D)1024

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Definitions:

Retained Earnings

The portion of a company's profits that is held or retained and saved for future use, investment, or to pay debt, instead of being paid out as dividends.

Statement Of Retained Earnings

A financial report that reveals the changes in retained earnings for a particular period of time.

December 31

Refers to the last day of the year, often associated with the end of the fiscal year for many companies.

Statement Of Retained Earnings

A financial report summarizing the changes in retained earnings for a specific period.