A Company Hopes to Improve Its Engines,setting a Goal of No

question 18

Multiple Choice

A company hopes to improve its engines,setting a goal of no more than 3% of customers using their warranty on defective engine parts.A random survey of 1200 customers found only 20 with complaints.Create a 95% confidence interval for the true level of warranty users among all customers.

• A)Based on the data,we are 95% confident the proportion of warranty users is between 0% and 2.4%.Therefore,the company has met its goal.
• B)Based on the data,we are 95% confident the proportion of warranty users is between 1% and 3%.Therefore,the company has met its goal.
• C)Based on the data,we are 95% confident the proportion of warranty users is between 0.9% and 3.8%.Therefore,the company has not met its goal.
• D)Based on the data,we are 95% confident the proportion of warranty users is between 2.0% and 2.4%.Therefore,the company has met its goal.
• E)Based on the data,we are 95% confident the proportion of warranty users is between 0.9% and 2.4%.Therefore,the company has met its goal.

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Definitions:

Share Price

The existing market price for a solitary share of a company's equity, available for trading.

Required Rate of Return

It is the minimum return an investor expects to achieve by investing in a particular security or portfolio, factoring in various risks and the time value of money.

Share of Stock

A share of stock represents ownership in a corporation, giving the shareholder a claim to a part of the company’s assets and earnings.

Dividend Growth Model

A method used to value a company's stock by assuming that dividends will grow at a constant rate in perpetuity.