Question 336693: 8. The average salary of graduates entering the actuarial field is reported to be $40,000. You sample 20 graduates and find the average salary to be $43,228 with a standard deviation of $4,000. At a 95% level of confidence is the statement regarding the average salary of $40K an accurate statement? (T-test)
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! The average salary of graduates entering the actuarial field is reported to be $40,000. You sample 20 graduates and find the average salary to be $43,228 with a standard deviation of $4,000. At a 95% level of confidence is the statement regarding the average salary of $40K an accurate statement? (T-test)
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Ho: u = 40000
Ha: u is not equal to 40000
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CV for 2-tail test with df=19 and alpha = 0.95: +/-invT(0.025,19)= +/-2.0930
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TS: t(43,228) = (43228-40000)/[4000/sqrt(20)] = 3.6090
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Since the TS is in the reject interval, reject Ho.
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Cheers,
Stan H.
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