A University Wants to Estimate the Average Distance That Commuter

question 10

Multiple Choice

A university wants to estimate the average distance that commuter students travel to get to class with an error of ± 3 miles and 90 percent confidence. What sample size would be needed, assuming that travel distances are normally distributed with a range of X = 0 to X = 50 miles, using the Empirical Rule μ ± 3σ to estimate σ.

• A)About 28 students
• B)About 47 students
• C)About 30 students
• D)About 21 students

---

Definitions:

Dividend Growth Model

A model that determines the current price of a stock as its dividend next period, divided by the discount rate, less the dividend growth rate.

Cost of Equity

The theoretical compensation a company provides to its shareholders for the risk they assume by investing their funds.

Beta

A measure of the volatility of a stock or portfolio compared to the volatility of the overall market.

Dividend Growth Model

A method of valuing a company's stock price by using predicted dividends and discounting them back to present value.