John Davis, a Manager of a Supermarket, Wants to Estimate

question 40

Multiple Choice

John Davis, a manager of a supermarket, wants to estimate the proportion of customers who use food stamps at his store. He has no initial estimate of what the sample proportion will be. How large a sample is required to estimate the true proportion to within 3 percentage points with 98% confidence?

• A) 756
• B) 1,849
• C) 1,067
• D) 1,509

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Definitions:

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset or stock.

Pure Discount Bond

A type of bond that is purchased at a price lower than its face value, with the face value being repaid at the time of maturity. It does not pay periodic interest.

Risk-Free Rate

The theoretical return on investment with zero risk of financial loss, often represented by the yield on government bonds.

Call Option Contracts

Financial derivatives that give the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain period.