An analyst computes the beta of the computer company WinDoze as 1.7 and the standard error of the estimate as 0.3. What is the 95 percent confidence interval for the calculated beta?
A)1.1 - 2.3
B)1.4 - 2.0
C)1.7 - 2.0
D)1.4 - 1.7

Question

Quizplus · Accepted Answer

To calculate the 95% confidence interval for the beta, we use the formula: beta ± (1.96 * standard error). Here, beta = 1.7 and standard error = 0.3. Thus, the confidence interval is 1.7 ± (1.96 * 0.3) = 1.7 ± 0.588. This gives us a range of 1.112 to 2.288, which rounds to 1.1 to 2.3.

An Analyst Computes the Beta of the Computer Company WinDoze