1.

Let’s assume you have taken 100 samples of size 64 each from a normally distributed population.
Calculate the standard deviation of the sample means if the population’s variance is 49.

The population stdev is:

sqrt(var)

= sqrt(49)

=7

The stdev of the sample means is:

sd/sqrt(N)

= 7/sqrt(64)

= 7/8

= 0.875

2.

A business wants to estimate the true mean annual income of its customers. It randomly samples 200
of its customers. The mean annual income was $52,500 with a standard deviation of $1,800. Find a
95% confidence interval for the true mean annual income of the business’ customers.

Here n = 200, Mean x = 52,500, Standard Deviation s = 1,800

α = 95%, so Zα = 1.96
Confidence interval = x ± Zα × sn
= 52500 ± 1.96 × (1800/√200)
= 52500 ± 249.4673
= (52500 – 249.4673, 52500 + 249.4673)
= (52250.5327, 52749.4673)
The 95 percent confidence interval is (52250.53, 52749.46)

3.

In the standard normal distribution the mean is always ___

 A) none of these

B) 0

C) 1

D) 2

4.

In the standard normal distribution the variance is always ___

A) 2

B) 1

C) 0

D) none of these

5.

In the standard normal distribution the standard deviation is always ___

A) 1

B) 0

C) none of these

D) 2

6.

If Tom gets a 70 on a physics test where the mean is 65 and the standard deviation is 5.8, where
does he stand in relation to his classmates?

Z=(70-65)/5.8=0.86 corresponds to a probability of 0.8051. This means that about 80% of the
students scored lower than him.
 A) he is in the top 10%

B) he is in the bottom 10%

C) he is in the bottom 20%

D) he is in the top 20%

7.

The area under a normal curve with mu = 15 and sigma = 2 is

A) 1

B) none of these

C) 2

D) 0

8.

The area to the left of "z" is .9976. What z score corresponds to this area?

A) 2.85

B) 2.82

C) none of these

D) -2.89

9.

The area under the standard normal curve is

 A) 2

B) none of these

C) 0

D) 1

10.

An auditor wants to estimate what proportion of a bank’s commercial loan files are incomplete. The
auditor randomly samples 100 files and finds 9 are incomplete. Using a 95% confidence interval,
estimate the true proportion of incomplete files for ALL the bank’s commercial loans.

Phat = 9/100 = 0.09

95% confidence interval:

Phat ± z*Sqrt(phat(1-phat)/n)

= 0.09 ±1.96*Sqrt(0.09(1-0.09)/100)

= (0.034, 0.146)

We are 95% confident that the proportion of all bank's commercial loan files lies between 0.034 and
0.146.

11.

According to the Central Limit Theorem, how big of a sample is necessary to make sure the sampling
distribution of sample means is normally distributed, if we know the underlying population is already
normally distributed?

Choose a sample of 30 to ensure that the sample means are normally distributed

12.

Interpret a 95% confidence interval of (3.355, 3.445) for the population mean.

We are 95 percent confident that the population mean lies between 3.355 and 3.445
 13.

Find P(9 < x < 15) when mu = 12 and sigma = 2. Write your steps in probability notation.

P(9<x<15)=P((9-12)/2<x<(15-12)/2)=P(-1.5<z<1.5)=z(1.5)-z(-1.5)= 0.933-0.0668=0.8664

14.

An auditor wants to estimate what proportion of a bank’s commercial loan files are incomplete. The
auditor wants to be within 4% of the true proportion when using a 95% confidence level. How many
files must the auditor sample? No estimate of the proportion is available, so use 0.5 for the population
proportion.

N ≥ p(1-p)z^2/E^2

N ≥ 0.5(1-0.5)1.96^2 / 0.04^2

N ≥ 600.25

N = 601 (rounded up to the next integer)

15.

Compute the population mean margin of error for a 99% confidence interval when sigma is 4 and the
sample size is 36.

The z value is 2.5758 (from a table).

The margin of error is:

z* sigma/sqrt(n), where n is the sample size

2.5758 * 4/sqrt(36)

= about 1.717 (depending on your rounding)

A) ± 1.3066...

B) ± 1.0966...

C) none of these
 D) ± 1.717...

16.

An automobile safety engineer wants to estimate the mean cost to repair a Chevy Corvette involved in
a 30 mile per hour head-on collision. The engineer crashes 20 Corvettes and finds the mean damage
is $16,300 with a standard deviation of $2,330. Find a 95% confidence interval for the true mean cost
to repair this type of car.

The sample mean xbar = $16,300

The sample standard deviation sx = $2,330
The sample size n = 20

The t score for a 0.95 confidence interval is the t score such that 0.025 is in each tail.
t = 2.093024
The confidence interval is:

( xbar - t * sx / sqrt( n ) , xbar + t * sx / sqrt( n ) )

( 15209.53 , 17390.47 )

17.

A standard IQ test has a mean of 98 and a standard deviation of 16. We want to be 90% certain that
we are within 8 IQ points of the true mean. Determine the sample size.

m = 98, s = 16, Margin of Error, E = 8

The z- score for 90% confidence is z = 1.645

Sample size is calculated using the formula N = (s * z/E)^2

N = (16 * 1.645 / 8)^2 = 10.82

A minimum sample size of 11 is required.

A) 10

B) 11

C) 27

D) none of these
 18.

A business wants to estimate the true mean annual income of its customers. The business needs to be
within $500 of the true mean. The business estimates the true population standard deviation is around
$2,300. If the confidence level is 95%, find the required sample size in order to meet the desired
accuracy.

Here Standard deviation σ = 2300

E = 500
α = 95%, so Zα = 1.96
Now, Sample size n = (σZ/E)2 = [(2300 * 1.96) / 500] = 81.2883
Hence the sample size is 81

19.

In a normal distribution with mu = 25 and sigma = 3 what number corresponds to z = -3?

-3=(x-25)/3

-9=x-25

-9+25=x

16=x

A) none of these

B) 20

C) 18

D) 16

20.
What is the critical z-value that corresponds to a confidence level of 88%

A) approximately 1.48

B) approximately 1.75

C) approximately 1.55

D) approximately 2.11