Practical Application Scenario
Practical Application Scenario 1
Refer to the GeneralMotors stock data. Using the same downloaded data, build a 95percent confidence interval for the daily stock volume using yourdownloaded data. What does this confidence interval mean? Why mightdecision makers be interested in such an interval?
Instructionson how to download stock data:
Go to Yahoo! Finance, linked in Resources.
Find a stock beginning with the first letter of your last name.For example, if your last name begins with F, you might chooseFord.
Search your chosen stock. When you find it, click on theHistorical Data tab to access historical stockprice.
Gather five years of daily adjusted stock price data byselecting the appropriate dates through the TimePeriod link. Be sure the end date includes days in thiscourse.
Click on the Download Data link to save thedata to your computer. The file will be saved so that it can beopened in Excel.
Practical Application Scenario 2
To complete thisscenario, use the Sample Size Estimator file provided inResources.
For the stock youselected in Module 1, what size sample would you need to bracketthe adjusted daily closing price within 50 cents (for example, amargin of error of 50 cents)? Use the standard deviation from yourdata for your calculations, and assume this standard deviationrepresents the population standard deviation.
Answer:
General motors data from 30/08/2013 to 30/08/2018.
The summary of this data is
n = 1260
We need a 95% C.I. The sample mean is the center of confidenceinterval, so half of interval is to left of sample mean (47.5%) andthe other half to the right of sample mean(47.5%). Using standardnormal table we find area which most closely approximates 0.475 andset 
equal to corresponding z-score.
= 1.96
Lower Limit 
Upper Limit 
Confidence Interval is (14494557.75,15366907.17)
This implies that when a random sample is drawn from thepopulation, we are 95% confident that it will lie in the range(14494557.75,15366907.17). The confidence interval for the meanhelps you to estimate the true population mean and lets you avoidthe additional effort that gathering a lot of extra data wouldrequire. You can compare the confidence interval you calculatedwith the target you were aiming for.
Scenario 2
For Adjusted closing price,
n= 1260
Mean = 31.88
Sd = 4.68
= 1.96
Margin of Error (E) = 50 cents =$ 0.5
We know,
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