8. IPOsinitial public offerings of stockcreate billions of dollars of new wealth for owners, managers,
and employees of companies that were previously privately owned. Nevertheless, hundreds of
large and thousands of small companies remain privately owned. The revenues of a random
sample of 10 firms from the largest private companies list are given in the table to the right.
Revenue (in billion) $12 $2 $34 $7 $12 $3 $10 $4 $7 $3
a. Use a 98% confidence interval to estimate the mean revenue of the population of companies in
question.
b. What characteristic must the population possess to ensure the appropriateness of the
estimation procedure in part a?
c. Suppose a magazine reports that the true mean revenue of all companies on the list is $5.0
billion. Is this claim believable?.
8 IPOsinitial public offerings of stockcreate billions of.pdf
1. 8. IPOsinitial public offerings of stockcreate billions of dollars of new wealth for owners, managers,
and employees of companies that were previously privately owned. Nevertheless, hundreds of
large and thousands of small companies remain privately owned. The revenues of a random
sample of 10 firms from the largest private companies list are given in the table to the right.
Revenue (in billion) $12 $2 $34 $7 $12 $3 $10 $4 $7 $3
a. Use a 98% confidence interval to estimate the mean revenue of the population of companies in
question.
b. What characteristic must the population possess to ensure the appropriateness of the
estimation procedure in part a?
c. Suppose a magazine reports that the true mean revenue of all companies on the list is $5.0
billion. Is this claim believable?
