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Question#1 [10 marks] 7 homeworkers were randomly sampled and it was determined that the distances they walked in their housework had an average of 39.2 miles per week and a sample standard deviation of 3.2 miles per week. 

a) What is the underlying assumption for distance walked? [2 marks]

b) Which distribution is more appropriate to model this behavour and why? [1+2 marks]

c) Using the distribution in b to construct a 98% con…dence interval for the population mean. [5 marks]

Question#2 [10 marks] In 1993, the Financial Accounting Standards Boards (FASB) was considering a proposal to require companies to report the potential e¤ect of emplyees’stock options on earnings per share (EPS). A random sample of 41 high-technology …rms revealed that the new proposal would reduce EPS by an average of 13.8 percent with a standard deviation of 18.9 percent. A random sample of 35 producers of consumer goods showed that the rpoposal would reduce EPS by 9.1 percent on average with a standard deviation of 8.7 percent. On the basis of these samples, is it reasonable to conclude at = 0:10 that the FASTBproposal will cause a greater reduction in EPS for high-technology …rms than for producers of consumer goods?


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