Question

The price of a share of stock divided by the company's estimated future earnings per share is called the P/E ratio. High P/E ratios usually indicate "growth" stocks, or maybe stocks that are simply overpriced. Low P/E ratios indicate "value" stocks or bar

(b) Find a 90% confidence interval for the P/E population mean μ of all large U.S. companies. (Round your answers to one decimal place.)

Lower and upper limit

(c) Find a 99% confidence interval for the P/E population mean μ of all large U.S. companies. (Round your answers to one decimal place.) lower and upper 

(d) Bank One (now merged with J. P. Morgan) had a P/E of 12, AT&T Wireless had a P/E of 72, and Disney had a P/E of 24. Examine the confidence intervals in parts (b) and (c). How would you describe these stocks at the time the sample was taken?

    


(e) In previous problems, we assumed the x distribution was normal or approximately normal. Do we need to make such an assumption in this problem? Why or why not? Hint: Use the central limit theorem.

    




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The price of a share of stock divided by the company's estimated future earnings per share is called the P/E ratio. High P/E ratios usually indicate "growth" stocks, or maybe stocks that are simply overpriced. Low P/E ratios indicate "value" stocks or bar
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