Estimation of the mean and the standard deviation

Reference no: EM1376052

The price earnings ratio for each stock is determined through dividing the value of a share of stock by the earnings per share reported by the firm for the most recent 4-quarters. A sample of 10 stocks taken from the Wall Street Journal (on September 29th, 2000) provided the following P/E ratios:

5, 7, 9, 12, 14, 24, 20, 15, 3, 28.

a. What is the point estimate of the mean and the Standard Deviation P/E ratio for the population of all stocks listed on the New York Stock Exchange?

b. At 98% confidence, what is the interval estimate of the mean P/E ratio for the population of all stocks listed on the New York Stock Exchange?

c. Test (using the two tailed test) at a 2 % significance level, the hypothesis that the mean P/E ratio for the population is $ 18.

Reference no: EM1376052

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