A Major Department Store Chain Is Interested in Estimating the Average

question 62

Multiple Choice

A major department store chain is interested in estimating the average amount its credit card customers spent on their first visit to the chain's new store.Fifteen credit card accounts were randomly sampled and analysed with the following results: $\bar { X }$ = $50.50 and S = 20.
-Assuming the distribution of the amount spent on their first visit is approximately normal,what is the shape of the sampling distribution of the sample mean that will be used to create the desired confidence interval for $\mu$ ?

• A) A t distribution with 15 degrees of freedom.
• B) A standard normal distribution.
• C) Approximately normal with a mean of $50.50.
• D) A t distribution with 14 degrees of freedom.

---

Definitions:

Market Risk Premium

The additional return expected by investors for taking on the higher risk of investing in the stock market over risk-free securities.

Dividend

A part of a company's profits distributed to its shareholders, typically every three months.

Required Return

The minimum expected rate of return on an investment necessary to compensate for the risk of the investment.

Beta

A measurement of the volatility of a stock or portfolio compared to the market as a whole.