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Based on the current rate of savings, the average American household will live on 59 percent of pre-retirement income once they retire, a recent report says. The report also says that Americans are behind in funding their retirement years. The report recommended saving enough to be able to live on 85 percent of income in retirement. However, the typical household has put aside only $18,750 for retirement. Suppose we can assume that the true average amount a typical household has put aside for retirement is $18,750. Also assume that these amounts vary with a standard deviation of $12,500. The distribution of these amounts is known to be right-skewed.
-Suppose 100 households are to be randomly selected and the average amount these 100 households have set aside for retirement calculated. What is the expected value of the average amount set aside for retirement in the sample of 100 households?
A) $1,250
B) $18,750
C) 85 percent
D) 59 percent

Question

Use the following information for questions:
 Based on the current rate of savings, the average American household will live on 59 percent of pre-retirement income once they retire, a recent report says. The report also says that Americans are behind in funding their retirement years. The report recommended saving enough to be able to live on 85 percent of income in retirement. However, the typical household has put aside only $18,750 for retirement. Suppose we can assume that the true average amount a typical household has put aside for retirement is $18,750. Also assume that these amounts vary with a standard deviation of $12,500. The distribution of these amounts is known to be right-skewed.
-Suppose 100 households are to be randomly selected and the average amount these 100 households have set aside for retirement calculated. What is the expected value of the average amount set aside for retirement in the sample of 100 households?
A) $1,250
B) $18,750
C) 85 percent
D) 59 percent

Quizplus · Accepted Answer

The expected value of the average amount set aside for retirement in a sample is equal to the true average amount a typical household has put aside for retirement, which is $18,750.

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