stat quiz 5 -...

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The weekly price fluctuation of WMB stock has a mean of $3.82 and a standard deviation of $0.43. A sample of 134 weekly  price fluctuations for this stock have been measured and the mean has been calculated.  a)Calculate the standard error of the mean ( σ X ). Give your answer to 3 decimal places.  σ X  = $  b)Give a qualitative explanation of why the standard error of the mean is always less than or equal to the standard deviation  of the population. Your explanation should be approximately 100 words.  don't know [2 out of 2] -    Feedback a)You are correct.  b)You have answered this essay.  Please review the model solution below.  Calculation a)The standard error of the mean can be calculated using the following formula:  show variables   σ = standard deviation of weekly price fluctuations = $0.43 n = sample size = 134 σ X
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= standard error of the mean = unknown σ X = σ √n   = 0.43 √134   = 0.03714634. ..   = $0.037
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b)Model solution  The population standard deviation measures the variation of the individual data points in a population. The standard error of  the mean measures the variation of all the possible sample means of a particular size (n) that can be drawn from a  population. In general, sample means will be less variable than individual data points because the effect of extreme values is  reduced by the averaging process. Therefore, in qualitative terms, the standard error of the mean will always be less than or 
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This note was uploaded on 11/08/2010 for the course STAT 301 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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stat quiz 5 -...

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