The price of a share of stock divided by the company's estimated future earnings per share is called the P/E ratio. High P/E ratios usually indicate "growth" stocks, or maybe stocks that are simply overpriced. Low P/E ratios indicate "value" stocks or bargain stocks. A random sample of 51 of the largest companies in the United States gave the following P/E ratiost. 11 35 19 13 15 21 40 18 60 72 9 20 29 53 16 26 21 14 21 27 10 12 47 14 33 14 18 17 20 19 13 25 23 27 5 16 8 49 44 20 27 8 19 12 31 67 51 26 19 18 32 (a) Use a calculator with mean and sample standard deviation keys to find the sample mean x and sample standard deviation s. (Round your answers to four decimal places.) X = S = (b) Find a 90% confidence interval for the P/E population mean u of all large U.S. companies. (Round your answers to one decimal place.) lower limit upper limit (c) Find a 99% confidence interval for the P/E population mean u of all large U.S. companies. (Round your answers to one decimal place.) lower limit upper limit
The price of a share of stock divided by the company's estimated future earnings per share is called the P/E ratio. High P/E ratios usually indicate "growth" stocks, or maybe stocks that are simply overpriced. Low P/E ratios indicate "value" stocks or bargain stocks. A random sample of 51 of the largest companies in the United States gave the following P/E ratiost. 11 35 19 13 15 21 40 18 60 72 9 20 29 53 16 26 21 14 21 27 10 12 47 14 33 14 18 17 20 19 13 25 23 27 5 16 8 49 44 20 27 8 19 12 31 67 51 26 19 18 32 (a) Use a calculator with mean and sample standard deviation keys to find the sample mean x and sample standard deviation s. (Round your answers to four decimal places.) X = S = (b) Find a 90% confidence interval for the P/E population mean u of all large U.S. companies. (Round your answers to one decimal place.) lower limit upper limit (c) Find a 99% confidence interval for the P/E population mean u of all large U.S. companies. (Round your answers to one decimal place.) lower limit upper limit
Holt Mcdougal Larson Pre-algebra: Student Edition 2012
1st Edition
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Chapter11: Data Analysis And Probability
Section: Chapter Questions
Problem 8CR
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Transcribed Image Text:The price of a share of stock divided by the company's estimated future earnings per share is called the P/E ratio. High P/E ratios usually indicate "growth" stocks, or maybe stocks that are simply
overpriced. Low P/E ratios indicate "value" stocks or bargain stocks. A random sample of 51 of the largest companies in the United States gave the following P/E ratiost.
11
35
19
13
15
21
40
18
60
72
9.
20
29
53
16
26
21
14
21
27
10
12
47
14
33
14
18
17
20
19
13
25
23
27
16
8
49
44
20
27
8
19
12
31
67
51
26
19
18
32
(a) Use a calculator with mean and sample standard deviation keys to find the sample mean x and sample standard deviation s. (Round your answers to four decimal places.)
X =
S =
(b) Find a 90% confidence interval for the P/E population mean u of all large U.S. companies. (Round your answers to one decimal place.)
lower limit
upper limit
(c) Find a 99% confidence interval for the P/E population mean u of all large U.S. companies. (Round your answers to one decimal place.)
lower limit
upper limit
(d) Bank One (now merged with J. P. Morgan) had a P/E of 12, AT&T Wireless had a P/E of 72, and Disney had a P/E of 24. Examine the confidence intervals in parts (b) and (c). How would
you describe these stocks at the time the sample was taken?
We can say Bank One is below average, AT&T Wireless is above average, and Disney is below average.
We can say Bank One is below average, AT&T Wireless is above average, and Disney is above average.
We can say Bank One is below average, AT&T Wireless is above average, and Disney falls close to the average.
We can say Bank One is above average, AT&T Wireless is below average, and Disney falls close to the average.
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