A stock market analyst notices that in a certain year, the price of IBM stock increased on 131 out of 252 trading days. Can these data be used to find a 95% confidence interval for the proportion of days that IBM stock increases? Explain

Answer:

Step 1 of 3:

Given, a stock market analyst notices that in a certain year, the price of IBM stock increased in 131 out of 252 trading days.

Here n = 252, x = 131.

Step 2 of 3:

The aim is to find a 95% confidence interval for the proportion of days that IBM stock increases.

Then,

= 252+ 4

= 256.

=

= 0.5195

A 95% confidence interval for p is given by

For a 95% confidence interval:

Z - value for 95% confidence interval is

Then,

= 0.51950.0612

(0.4583, 0.5807)